Grindrod Shipping Holdings Ltd., a global provider of maritime transportation services predominantly in the drybulk sector, announced its unaudited earnings results for the three months and year ended December 31, 2021.

The Group completed the plan to discontinue the tanker business during December 2021 and has presented the tanker business as a discontinued operation. The Group is now focused on the drybulk business which is presented as the continuing operations. Prior period figures have been reclassified for the presentation of the tanker business as a discontinued operation.

Financial Highlights for the Three Months Ended December 31, 2021

Continuing operations:
• Revenues of $142.5 million
• Gross profit of $66.7 million
• Profit for the period of $52.9 million
• Profit for the period attributable to owners of the Company of $52.9 million or $2.79 per ordinary share
• Adjusted net income of $54.6 million, or $2.88 per ordinary share(1)
• Adjusted EBITDA for the period of $73.2 million(1)
• Repurchased a combined total of 700,491 ordinary shares in the open market on NASDAQ and the JSE at an average price of $14.58 per share
• Handysize and supramax/ultramax TCE per day of $28,842 and $30,089, respectively

Financial Highlights for the Year Ended December 31, 2021
Continuing operations:

• Revenues of $455.8 million
• Gross profit of $176.9 million
• Profit for the year of $132.6 million
• Profit for the year attributable to owners of the Company of $122.1 million or $6.38 per ordinary share
• Adjusted net income of $122.4 million, or $6.39 per ordinary share(1)
• Adjusted EBITDA for the year of $206.9 million(1)
• Repurchased a combined total of 825,163 ordinary shares in the open market on NASDAQ and the JSE at an average price of $14.39 per share.
• Handysize and supramax/ultramax TCE per day of $21,336 and $23,608, respectively(1)
• Year end cash and cash equivalents of $104.2 million and restricted cash of $9.5 million

Operational Highlights for the Three Months Ended December 31, 2021
The Company exercised its option to extend the firm charter-in period of the 2014-built supramax bulk carrier IVS Naruo for 12 months at $13,000/day, starting from approximately January 21, 2022

Recent Developments

On February 16, 2022, the Company’s Board of Directors declared an interim quarterly cash dividend of $0.72 per ordinary share, payable on or about March 22, 2022, to all shareholders of record as of March 11, 2022 (the “Record Date”). As of February 16, 2022, there were 18,484,861 common shares of the Company outstanding (excluding treasury shares). Together with the $10.2 million of shares repurchased during the quarter, which is equivalent to a further $0.55 per ordinary share, the Company will return capital equivalent to a total of $1.27 per ordinary share to shareholders.

In view of the Record Date of March 11, 2022, shareholders may not reposition shares between the JSE and the U.S. Register during the period from March 9, 2022, at 9.00 a.m. (South African time) until March 14, 2022 at 9.00 a.m. (South African time).

• As of February 14, 2022, we have contracted the following TCE per day for the first quarter of 2022:
Handysize: approximately 1,103 operating days(2) at an average TCE per day of approximately $21,911
Supramax/ultramax: approximately 1,474 operating days(2) at an average TCE per day of approximately $24,374

CEO Commentary
Martyn Wade, the Chief Executive Officer of Grindrod Shipping, commented:
“2021 was a transformational year for Grindrod Shipping as we enjoyed record financial results during both the fourth quarter and the full year overall, while concurrently concluding several important strategic initiatives. For the fourth quarter of 2021, we achieved $73.2 million of Adjusted EBITDA and $54.6 million of Adjusted net income, or $2.88 per ordinary share, from continuing operations and $206.9 million of Adjusted EBITDA and $122.4 million of Adjusted Net Income, or $6.39 per ordinary share, for the full year. We completed the acquisition of the remaining shares in our IVS Bulk JV, divested nearly all of our product tankers which allowed us to focus and further expand our dry bulk operations, transitioned to quarterly reporting, increased our float and share liquidity in the United States market following the secondary offering of ordinary shares by one of our shareholders, materially strengthened our balance sheet, and initiated a flexible capital return policy during the third quarter rewarding our shareholders.

In this context, we declared a cash dividend of $0.72 per ordinary share for the fourth quarter and returned the equivalent of a further $0.55 per ordinary share of capital to shareholders through share repurchases during the period. The Board elected to maintain the same dividend per share as the third quarter despite materially higher share repurchases during the quarter due to the continued extraordinary strength in our financial results and our strong balance sheet. For the full year 2021, we have declared cash dividends totalling $1.44 per ordinary share and repurchased a total of $11.9 million in shares at levels highly accretive to our financial metrics per share.

Looking ahead, the outlook for the dry bulk sector appears positive. Healthy demand for minor bulk commodities coupled with the smallest newbuilding orderbook in decades and continued supply chain disruptions has translated into a tight supply/demand balance and strong freight rates. The stricter environmental regulations that come into effect in 2023, together with continued uncertainty regarding alternative fuels and propulsion systems and limited shipyard capacity, are expected to minimize the ordering of new ships and fleet growth in the near term. In this environment, Grindrod Shipping is strategically positioned to benefit not only from the strong sector fundamentals but also from the efficiency and competitiveness of our modern, Japanese built eco fleet.”

Unaudited Results for the Three Months Ended December 31, 2021 and 2020

The Group completed the plan to discontinue the tanker business during December 2021 and has presented the tanker business as a discontinued operation. The Group is now focused on the drybulk business which is presented as the continuing operations. Prior period figures have been reclassified for the presentation of the tanker business as a discontinued operation.

Continuing Operations
Revenue was $142.5 million for the three months ended December 31, 2021 and $55.7 million for the three months ended December 31, 2020. Vessel revenue was $142.3 million for the three months ended December 31, 2021 and $55.5 million for the three months ended December 31, 2020. Revenue increased due to improved market conditions in the drybulk business.

In the drybulk business, handysize total revenue and supramax/ultramax total revenue was $50.6 million and $90.5 million, respectively, for the three months ended December 31, 2021, and $23.7 million and $34.6 million, respectively, for the three months ended December 31, 2020. Handysize vessel revenue and supramax/ultramax vessel revenue was $50.5 million and $90.5 million, respectively, for the three months ended December 31, 2021, and $19.6 million and $34.6 million, respectively, for the three months ended December 31, 2020. The results for the fourth quarter of 2021 were positively impacted by higher TCE per day rates achieved in our handysize and supramax/ultramax drybulk carrier segments, reflecting the stronger spot markets in these segments.

Handysize TCE per day was $28,842 per day for the three months ended December 31, 2021 and $8,395 per day for the three months ended December 31, 2020. Supramax/ultramax TCE per day was to $30,089 per day for the three months ended December 31, 2021 and $10,937 per day for the three months ended December 31, 2020.

Cost of sales was $75.7 million for the three months ended December 31, 2021 and $51.2 million for the three months ended December 31, 2020. Cost of sales increased due to higher charter hire costs incurred for our short-term chartered-in vessels as drybulk spot charter rates increased significantly during 2021.

In the drybulk business, our handysize segment and supramax/ultramax segment cost of sales was $21.2 million and $54.8 million, respectively, for the three months ended December 31, 2021 and $23.1 million and $32.2 million, respectively, for the three months ended December 31, 2020.

Handysize voyage expenses and supramax/ultramax voyage expenses were $6.5 million and $21.2 million, respectively, for the three months ended December 31, 2021 and $6.5 million and $10.6 million, respectively, for the three months ended December 31, 2020. Handysize vessel operating costs and supramax/ultramax vessel operating costs were $8.0 million and $4.3 million, respectively, for the three months ended December 31, 2021, and $7.4 million and $4.0 million, respectively, for the three months ended December 31, 2020. Handysize vessel operating costs per day were $5,767 per day for the three months ended December 31, 2021 and $5,312 per day for the three months ended December 31, 2020. Vessel operating costs per day were higher in the handysize drybulk carrier segment for the fourth quarter of 2021 in comparison to the fourth quarter of 2020 due to increased crew repatriation costs partly as a result of COVID-19 travel restrictions, quarantine requirements and related costs and increased repair costs on certain of the older vessels. Supramax/ultramax vessel operating costs per day were $5,168 per day for the three months ended December 31, 2021 and $5,384 per day for the three months ended December 31, 2020. Vessel operating costs per day were lower in the supramax/ultramax carrier segment for the fourth quarter of 2021 in comparison to the fourth quarter of 2020 due to higher repair costs in the fourth quarter of 2020 on a small number of vessels arising from the change in fuel which were partially offset by increased crew repatriation costs in the fourth quarter of 2021 as a result of COVID-19 travel restrictions.

The long-term charter-in costs per day for our supramax/ultramax fleet was $12,912 per day during the three months ended December 31, 2021 and $11,924 per day for the three months ended December 31, 2020. During the three months ended December 31, 2021, out of 2,305 operating days in the supramax/ultramax segment, 61.9% were fulfilled with owned/long-term chartered-in vessels and the remaining 38.1% with short-term chartered-in vessels.

Gross profit was $66.7 million for the three months ended December 31, 2021 and $4.5 million for the three months ended December 31, 2020.

Other operating income (expense) was operating income of $0.1 million for the three months ended December 31, 2021 and operating expense of $1.2 million for the three months ended December 31, 2020. Other operating income in the fourth quarter of 2021 related to a small foreign exchange gain compared to an impairment loss recognized on ships and foreign exchange losses recognized in the fourth quarter of 2020.

Administrative expense was $11.3 million for the three months ended December 31, 2021 and $5.4 million for the three months ended December 31, 2020. Administrative expense increased in the fourth quarter of 2021 as compared to the fourth quarter of 2020 due to higher staff incentive costs following the increase in profit.

Interest income was $0.1 million for the three months ended December 31, 2021 and $0 million for the three months ended December 31, 2020.

Interest expense was $2.8 million for the three months ended December 31, 2021 and $4.1 million for the three months ended December 31, 2020. Interest expense decreased in the fourth quarter of 2021 as compared to the fourth quarter of 2020 due to the repayment of the non-bank loan (a secured facility with Sankaty European Investments III S.à.r.l) in May 2021 that was priced at a relatively higher interest rate.

Income tax (benefit) expense was a benefit of $0.1 million for the three months ended December 31, 2021 and an expense of $0.2 million for the three months ended December 31, 2020.

Profit for the three months ended December 31, 2021 was $52.9 million compared to a loss of $6.3 million for the three months ended December 31, 2020.

Profit attributable to owners of the Company for the three months ended December 31, 2021 was $52.9 million compared to a loss of $6.2 million for the three months ended December 31, 2020.

Discontinued Operation
Loss for the three months ended December 31, 2021 was $0.1 million compared to a loss of $7.8 million for the three months ended December 31, 2020. The loss from the discontinued operation was lower for the fourth quarter of 2021 in comparison to the fourth quarter of 2020 due to the lack of operating activity following the sale of the remaining tankers early in 2021 and impairment losses recognized on these tankers in 2020 prior to their sale in 2021.

Loss attributable to owners of the Company for the three months ended December 31, 2021 was $0.1 million compared to a loss of $7.8 million for the three months ended December 31, 2020.

Continuing and Discontinued Operations
Profit for the three months ended December 31, 2021 was $52.8 million compared to a loss of $14.1 million for the three months ended December 31, 2020.

Profit attributable to owners of the Company for the three months ended December 31, 2021 was $52.8 million compared to a loss of $14.0 million for the three months ended December 31, 2020.

Unaudited Results for the Year Ended December 31, 2021 and 2020
The Group completed the plan to discontinue the medium range and small tanker segments during December 2021 and has presented the tanker business as a discontinued operation. The Group is now focused on the drybulk business which is presented as the continuing operations. Prior period figures have been reclassified to represent the change in the Group strategy.

Continuing Operations
Revenue was $455.8 million for the 12 months ended December 31, 2021 and $210.7 million for the 12 months ended December 31, 2020. Vessel revenue was $455.3 million for the 12 months ended December 31, 2021 and $204.0 million for the 12 months ended December 31, 2020. The results for the 12 months ended December 31, 2021 were positively impacted by higher TCE per day rates achieved in our handysize and supramax/ultramax drybulk business, reflecting the stronger spot markets in these segments.

In the drybulk business, handysize total revenue and supramax/ultramax total revenue was $158.2 million and $292.3 million, respectively, for the 12 months ended December 31, 2021, and $84.5 million and $124.7 million, respectively, for the 12 months ended December 31, 2020. Handysize vessel revenue and supramax/ultramax vessel revenue was $157.7 million and $292.2 million, respectively, for the 12 months ended December 31, 2021, and $74.6 million and $124.4 million, respectively, for the 12 months ended December 31, 2020.

Handysize TCE per day was $21,336 per day for the 12 months ended December 31, 2021 and $6,629 per day for the 12 months ended December 31, 2020. Supramax/ultramax TCE per day was $23,608 per day for the 12 months ended December 31, 2021 and $10,072 per day for the 12 months ended December 31, 2020.

Cost of sales was $278.9 million for the 12 months ended December 31, 2021 and $206.6 million for the 12 months ended December 31, 2020. Cost of sales increased due to the higher short-term charter hire costs as drybulk spot charter rates increased in 2021.

In the drybulk business, our handysize segment and supramax/ultramax segment cost of sales was $84.2 million and $195.8 million, respectively, for the 12 months ended December 31, 2021 and $90.5 million and $121.3 million, respectively, for the 12 months ended December 31, 2020.

Handysize voyage expenses and supramax/ultramax voyage expenses were $27.2 million and $69.6 million, respectively, for the 12 months ended December 31, 2021 and $31.0 million and $48.5 million, respectively, for the 12 months ended December 31, 2020. Handysize vessel operating costs and supramax/ultramax vessel operating costs were $31.0 million and $15.8 million, respectively, for the 12 months ended December 31, 2021, and $28.4 million and $13.6 million, respectively, for the 12 months ended December 31, 2020. Handysize vessel operating costs per day were $5,670 per day for the 12 months ended December 31, 2021 and $5,030 per day for the 12 months ended December 31, 2020. Supramax/ultramax vessel operating costs per day were $5,223 per day for the 12 months ended December 31, 2021 and $5,073 per day for the 12 months ended December 31, 2020. Vessel operating costs per day were higher in the handysize and supramax/ultramax drybulk carrier segments for the 12 months ended December 31, 2021 in comparison to the 12 months ended December 31, 2020 due to increased crew repatriation costs partly as a result of COVID-19 travel restrictions, quarantine requirements and related costs and the handysize drybulk carriers were further impacted by repair costs on the older vessels.

The long-term charter-in costs per day for our supramax/ultramax fleet was $12,742 per day during the 12 months ended December 31, 2021 and $12,005 per day for the 12 months ended December 31, 2020. During this period, out of 9,428 operating days in the supramax/ultramax segment, 59.6 % were fulfilled with owned/long-term chartered-in vessels and the remaining 40.4% with short-term chartered-in vessels.

Gross profit was $176.9 million for the 12 months ended December 31, 2021 and $4.1 million for the 12 months ended December 31, 2020.

Other operating income (expense) was an income of $3.9 million for the 12 months ended December 31, 2021 and an expense of $0.3 million for the 12 months ended December 31, 2020. Other operating income increased in the 12 months ended December 31, 2021 as compared to the 12 months ended December 31, 2020 due to the reversal of an impairment loss on ships and on right-of-use assets that were partly offset by higher impairments on goodwill and intangibles for the 12 months ended December 31, 2021, compared to impairment losses on ships that were partially offset by exchange rate gains in the 12 months ended December 31, 2020.

Administrative expense was $36.1 million for the 12 months ended December 31, 2021 and $21.4 million for the 12 months ended December 31, 2020. Administrative expense increased in the 12 months ended December 31, 2021 as compared to the 12 months ended December 31, 2020 due to higher staff incentive costs following the increase in profit.

Share of losses of joint ventures was $0 million for the 12 months ended December 31, 2021 and a loss of $2.5 million for the 12 months ended December 31, 2020.

Interest income was $0.2 million for the 12 months ended December 31, 2021 and $0.5 million for the 12 months ended December 31, 2020.

Interest expense was $12.3 million for the 12 months ended December 31, 2021 and $15.1 million for the 12 months ended December 31, 2020. Interest expense decreased in the 12 months ended December 31, 2021 as compared to the 12 months ended December 31, 2020 due to the repayment of the non-bank loan (a secured facility with Sankaty European Investments III S.à.r.l) that was priced at a relatively higher interest rate.

Income tax benefit (expense) was a benefit of $0.1 million for the 12 months ended December 31, 2021 and an expense of $0.2 million for the 12 months ended December 31, 2020.

Profit for the 12 months ended December 31, 2021 was $132.6 million and a loss of $35.0 million for the 12 months ended December 31, 2020.

Profit attributable to owners of the Company for the 12 months ended December 31, 2021 was $122.1 million and a loss of $32.7 million for the 12 months ended December 31, 2020.

Discontinued Operation
Loss for the 12 months ended December 31, 2021 was $3.2 million compared to a loss of $6.1 million for the 12 months ended December 31, 2020. The loss from the discontinued operation was lower for the 12 months ended December 31, 2021 in comparison to the 12 months ended December 31, 2020 due to the lack of operating activity following the sale of the remaining tankers early in 2021 and impairment losses recognized on tankers in 2020 prior to their sale in 2021.

Loss attributable to owners of the Company for the 12 months ended December 31, 2021 was $3.2 million compared to a loss of $6.1 million for the 12 months ended December 31, 2020.

Continuing and Discontinued Operations
Profit for the 12 months ended December 31, 2021 was $129.5 million compared to a loss of $41.1 million for the 12 months ended December 31, 2020.

Profit attributable to owners of the Company for the 12 months ended December 31, 2021 was $118.9 million compared to a loss of $38.8 million for the 12 months ended December 31, 2020.

Net cash flows generated from operating activities was an inflow of $204.9 million for the 12 months ended December 31, 2021 and $70.4 million for the 12 months ended December 31, 2020. Net cash generated from (used in) investing activities was an inflow of $1.1 million for the 12 months ended December 31, 2021 and an outflow of $22.6 million for the 12 months ended December 31, 2020. Net cash flows used in financing activities was an outflow of $139.1 million for the 12 months ended December 31, 2021 and $42.0 million for the 12 months ended December 31, 2020.

As of December 31, 2021, we had cash and cash equivalents of $104.2 million and restricted cash of $9.5 million.
Source: Grindrod Shipping Holdings Ltd