major shareholder issues profit upgrade

"At the time that Grindrod ordered the tanker series, average daily earnings on the spot market were around $14,500 per day, but current daily rates are well above $30 000, and even time charter rates are now up by in excess of 50% over the same period.

Although the market had been bullish for several months - pushed further by the seasonal demand during the northern hemisphere's winter - Grindrod noted that the respected brokers Clarksons believe that the trend will continue well into 2008.

A shortage of refinery capacity in the US against a growing demand for refined products would not be fulfilled in the medium-term, as environmental lobbies had succeeded in curtailing the expansion of North American refineries.

At the same time, China, analysts believe, will continue to absorb huge volumes of imported energy, much coming from Singaporean or other oriental refineries, leading to relatively short-haul tanker operations that are not as lucrative as the product tanker trade to the US from West Africa, Singapore and elsewhere, adding substantially to the ton-mile demand.

On many important trades now, the movement of cargo in double-skinned tankers is mandatory, and over the next few years, all single-skinned vessels will be phased out.

This has boosted orders for these vessels to the extent that most shipyards capable of building them have full order books well into 2008.

It has also increased substantially the value of Unicorn's fleet of six tankers (upward of 37,000 deadweight tons (dwt)), a small coastal tanker, and another four long-term chartered products tankers, as well as two chemical tankers in the Stolt chemical tanker pool.

In addition, Unicorn has on order a further four 37,000 dwt products tankers, four 12,800 dwt chemical/products tankers and has long-term chartered three specialised stainless steel chemical tankers.

Grindrod's share price has benefited substantially from the booming global shipping market over the past year as well as the continued robust outlook, with the counter being one of the strongest performers on the JSE Securities Exchange in 2004.

Having had the foresight to lease in a large number of its ships at lower rates during a weakening in the shipping market in 2001-02, the company has in turn been leasing them out to its clients on longer-term contracts at far higher rates, thus profiting handsomely. "