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The rising cost of servicing Transnet’s debt eroded its measure of cash interest cover — the amount of interest expenses a company can pay from earnings — to 1.9 times, while several loans require as much as 2.5 times, it said. Net finance costs increased 7.9% to R7.1 billion during the period.
South Africa’s state-owned rail and ports operator reported a wider first-half loss as failing infrastructure and security issues continue to hamper progress in turning the business around
Transnet’s loss was R2.2 billion in the six months through September, compared with R1.6 billion a year earlier, it said in an emailed statement on Tuesday. The company secured waivers from banks to avoid triggering a debt default after it breached loan covenants during the period. Last year also the company availed such comforts.
The rising cost of servicing Transnet’s debt eroded its measure of cash interest cover — the amount of interest expenses a company can pay from earnings — to 1.9 times, while several loans require as much as 2.5 times, it said. Net finance costs increased 7.9% to R7.1 billion during the period.
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The company that’s essential to South African import and export flows has had an abysmal performance in recent years. Rail inefficiencies cost the economy more than R400 billion in 2022, according to the National Treasury, while the nation’s minerals council estimates mining exports fell R50 billion short of the target. The ports it runs have been ranked among the worst in the world.
