Miningweb: Transnet achieves significant recovery, lays foundation for sustainable growth in FY2025

Key topics:Revenue rises 7.8% to R82.7bn in FY2025EBITDA surges 39.4% as losses narrow sharplyRail reforms, private partnerships drive sustainable growth strategySign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Kerry Lanaghan.Transnet SOC Ltd announced its annual results for the year ended 31 March 2025, revealing a substantial recovery and a solid foundation for future growth. The company reported a 7.8% increase in revenue, reaching R82.7 billion, while net operating expenses decreased by 4.9% to R52.1 billion. EBITDA saw a remarkable 39.4% rise to R30.6 billion, pushing the EBITDA margin to 37.0%. The net loss for the year improved by 74%, narrowing from R7.3 billion in the prior year to R1.9 billion, bringing Transnet closer to its long-term profitability goal. Capital investment also surged by 44.2% to R24.0 billion, demonstrating a commitment to modernising the country’s freight logistics infrastructure.The improved financial performance is attributed to the successful implementation of Transnet’s Recovery Plan, particularly benefiting the rail business. Revenue growth was driven by weighted average tariff increases and volume increases in the automotive and rail sectors, although lower pipeline and container volumes partially offset this gain. Transnet is now shifting its focus from operational recovery to transformation and sustainable growth through its "Reinvent for Growth Strategy". This strategy prioritises customers, partners, and the national economy. Key operational priorities include improving rolling stock availability, rail infrastructure condition, and replenishing port equipment. The company is also committed to reducing turnaround times and congestion across rail, ports, and pipelines through investments in new equipment, digital systems, and operational excellence. Private Sector Participations (PSPs) are highlighted as a cornerstone of this strategy, aiming to make Transnet more agile and competitive.Significant progress has been made in implementing key reform initiatives aligned with the Freight Logistics Roadmap. Notable achievements include the establishment of the Transnet Rail Infrastructure Manager (TRIM) as an interim Operating Division, formally separating infrastructure management from rail operations to enable private train operating company (TOC) participation. TRIM also collaborated to publish the Final Network Statement, detailing access conditions and fee structures for a competitive multi-operator rail market. A market-facing slot application process for network access was launched, receiving strong market interest. In the port environment, short-term initiatives saw the delivery and commissioning of landside and maritime equipment, including new tugboats for Durban and East London. In a landmark move, Transnet National Ports Authority (TNPA) appointed the first private sector operator to develop and manage a fully-fledged container terminal at the Port of Richards Bay, expected to add 200,000 TEUs of annual capacity.These initiatives are integral to Transnet’s strategy, driving tactical recovery and transformative change. The focus for the 2025/26 financial year will be on measurable improvements in rail volumes, port throughput, and financial sustainability, supported by improved financial performance, disciplined capital management, and a government guarantee facility. Transnet emphasises its role in positioning South Africa globally, unlocking trade, and ensuring national prosperity..The full media release from Transnet can be read below:TRANSNET RECOVERY SETS A SOLID FOUNDATION FOR SUSTAINABLE GROWTH[Johannesburg, 5 September 2025] Transnet SOC Ltd (“Transnet”) today released its annual results for the year ended 31 March 2025. Salient features of financial performance, compared to the prior financial year, are as follows:• Revenue increased by 7,8% to R82,7 billion• Net operating expenses decreased by 4,9% to R52,1 billion• EBITDA increased by 39,4% to R30,6 billion, with the EBITDA margin increasing to 37,0%.• Capital investment increased by 44,2% to R24,0 billion for the year• Loss for the year is R1,9 billion, a 74% improvement (2024: R7,3 billion)• Cash generated from operations after working capital changes decreased by 0,6% to R28,6 billion• Gearing of 49,6% and cash interest cover (including working capital changes) at 1,8TimesThe Company experienced significant improvement in the operating environment, particularly in the rail business, owing to implementation of the Recovery Plan. Transnet’s revenue performance for the year ended 31 March 2025 improved by 7,8%, when compared to the prior year. This was driven by weighted average tariff increases as well volume increases in the automotive and rail businesses, but lower pipeline and container volumes partially offset the revenue increase.At R1,9 billion, Transnet has narrowed net loss by 73,7%, compared to the prior year, bringing the organisation closer to its goal of long-term profitability. This improvement reflects the success of Transnet’s strategic initiatives and demonstrates the positive impact of steps taken to address operational challenges.The increase in capital expenditure, from R16,9 billion to R24 billion, signifies Transnet’s focus on expanding and modernising the country’s freight logistics infrastructure.Operational outlookAs Transnet executes the Reinvent for Growth Strategy, the focus shifts from operational recovery to transformation and long-term, sustainable growth. This is a shift in strategy and mindset, one that places our customers, partners and the country’s economy at the heart of everything we do.The annual improved revenue performance, reliable cash generation from operations after working capital changes and improved rail volume performance, collectively provides an adequate platform for Transnet to continue its drive to sustainable profitability.Transnet will continue to prioritise focused projects on improving rolling stock availability and the rail infrastructure condition while building on improved efficiencies and customer projects that have aided improved volume performance on key corridors.The replenishment of key port equipment in the short- and medium-term as well as through the acquisition of critical spares to support the maintenance teams is a key focus area across all terminals and will go a long way to sustain efficient and improved performance at the ports.The Company is deeply committed to improving the turnaround times, reducing congestion and enhancing the predictability of our services across rail, ports and pipelines. Investments in new equipment, digital systems and operational excellence are already yielding results.Private Sector Participations (PSPs) will remain a cornerstone of our strategy. These partnerships will ensure that Transnet becomes more agile, competitive and customer centric.Transnet has made significant progress in implementing key reform initiatives aligned with the Freight Logistics Roadmap, which outlines the strategic direction for the sector transformation.Some of the notable achievements include:1. Establishment of the Transnet Rail Infrastructure Manager (TRIM)In line with the FLR, several strategic initiatives were executed, most notably the creation of TRIM as an interim Operating Division. This marked a fundamental milestone in the reform process, formally separating infrastructure management from rail operations. This structural change enables the participation of private train operating companies (TOCs) in a fair and competitive market.2. Publication of the Final Network StatementTRIM, working under expedited timelines, collaborated with the Independent Rail Economic Regulator Committee (IRERC) to publish the final network statement. This document is a critical enabler of a competitive multi-operator rail market, detailing access conditions, including fee structures, for the national freight rail network.3. Launch of the Slot Application ProcessTRIM initiated a market-facing slot application process, inviting potential TOCs to apply for network access and operational slots in order to enhance the performance of the logistics sector in South Africa. The initiative received strong market interest, and the evaluation of applications was ongoing at the close of the financial year.4. Port Infrastructure and Equipment EnhancementsWithin the port environment, several short-term FLR initiatives were implemented to improve operational efficiency. These included the delivery and commissioning of landside and maritime equipment to support Transnet Port Terminals (TPT) and Transnet National Ports Authority (TNPA). TNPA received several new tugboats, enhancing capacity at the strategic Port of Durban and renewing capabilities at support ports such as East London.5. Private Sector Participation in Container Terminal DevelopmentIn a landmark development, TNPA appointed the first private sector operator to develop and manage a fully-fledged container terminal in South Africa, located at the Port of Richards Bay. This initiative is expected to add 200,000 TEUs of annual container capacity, fostering growth and competition in the ports network. The preferred bidder is a consortium comprising a well-established local logistics firm with global reach, partnered with a regionally entrenched local entity.These initiatives are embedded within Transnet’s Reinvent for Growth Strategy, driving tactical recovery, transformative change and laying the foundation for expansionary growth. In the 2025/26 financial year, our focus will be on measurable improvements in rail volumes, port throughput and financial sustainability, while embedding accountability and performance monitoring to ensure delivery. Improved financial performance, disciplined capital management, and the government guarantee facility together provide the stability and resources needed for Transnet to modernise infrastructure, attract private investment, and strengthen competitiveness, ensuring the turnaround is sustainable.By stabilising freight corridors, modernising ports, and opening the door to private investment, we are positioning South Africa to compete globally, unlock trade, and seize the opportunity of hosting the G20. Transnet recognises that its success is directly tied to the country’s success because when Transnet works, South Africa thrives.