Grindrod

Source: Exec Digital UK

Date :01/08/2008 00:00:00

Grindrod is no newcomer to the business of shipping and trading, with a history of success based on long established expertise, knowledge and experience

Written by Fiona Nicholson and Produced by Aaron Wells

Grindrod’s operations span a wide range of activities, including international shipping, trading, freight, logistics and even financial services, in the form of Grindrod Bank.

The Durban-based company has set its course for financial growth and results show that it is being steered in the right direction.

The proof of performance is in the figures and Grindrod’s shareholders recently received some very welcome news. The company’s trading update at the end of April gave advance notice of a likely increase in earnings per share of between

55 percent and 75 percent.

Even better news was to yet come. A trading statement issued at the beginning of July declared a revision to this figure, informing shareholders that a massive 85-95 percent increase could be expected.

The recent financial results have been generated by two main contributing factors; operational performance of the shipping division has been stronger than anticipated and also the sale of a ship completed sooner than expected.

But the spectacular growth at Grindrod is nothing new. The company’s share price has risen five-fold in the last few years and it is estimated it will continue to scale new heights.

Maiden voyage

Grindrod is no newcomer to the business of shipping and trading. Its successes are based on long established expertise, knowledge and experience.

The company was founded eighty or so years ago by Leon Renaud and Captain John Edward Grindrod, who purchased a 150 ton steamer, the Frontier, which needed a substantial overhaul.

The ship was then re-equipped, re-floated and was soon back on the high seas, carrying sugar, oil, timber, hides, wool and livestock, between Port St Johns in South Africa and East London.

That was just the start. Almost a century later, Grindrod’s days of being a small business are long over.

From a two man operation, Grindrod has grown to employ a total of around 6000 people. Annual profits have been recorded at more than R1 billion and the company controls assets worth more than R7 billion.

Grindrod has expanded geographically too. Nowadays the company has a presence in each of South Africa’s major ports, as well as in Johannesburg, Mozambique, Angola and Namibia. It also has offices in London, Spain, Singapore and Dubai.

The captain of the ship

Throughout the company’s history there has always been a Grindrod at the helm, but that recently changed, when Murray Grindrod, Captain John’s grandson, retired as chairman.

Grindrod joined the company in 1957 and his influence was instrumental in creating and shaping the company as it operates today.

He initially learned the trade from the wharf side, which involved hiring staff, stevedoring and general ships husbandry. He also gained a strong grasp of the trade from learning about the operations of ships at sea.

However Grindrod’s skills were not restricted to knowledge and experience of shipping. He also had the foresight to recognise that change was needed and persuaded his father, Walter Grindrod, who was then heading up the business with Leon Renaud’s son Cecil, to seek external finance to modernise the fleet. His powers of persuasion worked, paving the way for the company’s expansion.

All hands on deck

As it has grown, Grindrod has moved with the times, adapting its practices to fit with the changing business environment. The company has adopted a more entrepreneurial decision-making style, as well as modernising its operations and introducing black empowerment initiatives to ensure availability of equal opportunities.

Another key feature of Grindrod’s business practices is its commitment to high standards of behaviour. The company has produced a code of ethics, endorsed by the Ethics Institute of South Africa. It is designed to raise ethical awareness, act as a guide and to assure customers and suppliers that they are dealing with a company that acts with integrity.

Grindrod takes care to ensure its employees are fully aware of the company’s ethos, right from the start of their employment. The induction programme informs staff about the group’s standards, compliance procedures and values, which incorporate integrity, professionalism, treating people fairly, accountability and respect for company assets.

Respect for the environment is a priority too, as Grindrod is committed to minimising the impact of its operations on the environment. It also recognises that saving energy is good business practice and the company is driving continual improvement initiatives. One of the ways in which it seeks to conserve energy is through ship and engine design innovation and by maintaining a strict maintenance programme.

Barging into new markets

Grindrod continues to seek new business opportunities throughout its operations and recently combined its skills and expertise with those of an emerging talent in the industry.

The joint venture took place between its subsidiary Unicorn Shipping, a 75-year old veteran of the industry, which operates mainly in the chemical and product tanker markets and Calulo Services, a shipping and logistics company formed five years ago.

Their collaboration was signed and sealed at the start of the year and is now successfully underway. The companies are jointly operating bunker barges in South African ports, delivering bunker fuels to the maritime industry and providing shipping services on the South African coast, focusing predominantly on the tanker market.

Their ship has come in

The company is also growing its fleet and towards the end of 2007, Grindrod took delivery of the largest vessel built for the group to date. Built in Japan, the IVS Cabernet is almost the length of three rugby fields and is designed to carry coal and iron ore to service the continuing rise in demand for these commodities.

Much of Grindrod’s fleet has already been contracted. This means that a sizeable portion of the company’s income is already confirmed and therefore not susceptible to fluctuations in shipping markets.

CEO Alan Olivier says: “We now have a modern, diversified fleet, which will grow to 56 ships by the end of 2011.” He adds: “The strategy of ordering ships when markets have indicated a future shortage of a particular class of ship has served us well.”