Transnet Returns to Profit After Four Years as Rail Volumes Rise and R129 Billion Investment Plan Takes Shape

JD GLOBAL MEDIA | SOUTH AFRICA
Published: 20 September 2026

TRANSNET BACK IN THE BLACK

South Africa’s state-owned freight logistics company Transnet has returned to annual profitability for the first time in four years, recording a R4.6 billion profit for the financial year ended 31 March 2026.

The result marks a significant change from the R1.9 billion loss recorded in the previous financial year and comes as the company continues a broad programme aimed at restoring the performance of its rail, port and pipeline networks.

Transnet reported that revenue increased by 7.1% to R88.6 billion, supported by higher rail and pipeline volumes as well as tariff increases.

The company’s earnings before interest, tax, depreciation and amortisation, known as EBITDA, increased slightly to R30.9 billion, although the EBITDA margin declined to 34.8%.

The financial results were released as Transnet works through one of the most important periods in its recent history.

The company is responsible for much of the infrastructure through which South Africa moves exports, imports, minerals, agricultural products, manufactured goods, fuel and other commodities.

For years, weaknesses in rail and port performance have been associated with higher logistics costs, delays and lost export opportunities.

The latest results show improvement in several operating indicators, but they also reveal that Transnet still faces substantial debt, high operating costs and a large infrastructure investment requirement.

The return to profit is therefore an important financial milestone, but it does not by itself resolve the company's longer-term challenges.

WHAT DROVE THE R4.6 BILLION PROFIT

One of the most important factors behind the reported profit was a transaction involving the Durban Gateway Terminal at Pier 2.

Transnet transferred management control of the terminal to international port operator International Container Terminal Services Inc., while retaining a 50.001% interest.

The transaction involved the disposal of a 49.999% interest in the terminal.

Transnet recognised a gain of approximately R12.5 billion on the disposal and related fair-value adjustment.

That gain had a major effect on the final annual result.

Without the transaction, the company's financial performance would have been substantially weaker.

This distinction is important when assessing Transnet's underlying operating recovery.

The company did also report improvements in rail and pipeline volumes, showing that operational changes contributed to stronger revenue.

However, the terminal transaction was a major contributor to the bottom-line profit.

The result should therefore be understood as a combination of operational improvement and a significant once-off transaction-related gain.

REVENUE REACHES R88.6 BILLION

Transnet's revenue increased from the previous year to R88.6 billion.

The 7.1% increase was supported by higher volumes in parts of the business and weighted average tariff increases.

Higher revenue provides additional resources for operations and infrastructure investment, but revenue growth must also be considered alongside the company's expenditure.

Transnet's net operating expenses increased by 10.8% to R57.7 billion.

That means operating costs grew faster than revenue.

The difference illustrates why profitability remains a challenge even when volumes improve.

Transnet needs to increase the amount of freight it moves while controlling maintenance, personnel, security, fuel, electricity and other costs.

Improving efficiency is consequently central to the company's recovery strategy.

RAIL VOLUMES MOVE HIGHER

Freight rail is one of the most closely watched parts of Transnet's operations.

During the financial year, rail volumes increased by 4.9% to 167.9 million tonnes, compared with approximately 160.1 million tonnes in the previous year.

The increase is significant because rail performance has been under pressure for several years.

Mining companies in particular depend on rail to move bulk commodities to ports.

Coal, iron ore, manganese and other mineral exports can involve long-distance transportation from inland mining regions to coastal terminals.

When rail capacity is unavailable or unreliable, companies may turn to road transport.

That can increase logistics costs and place additional pressure on South Africa's road network.

The increase in rail volumes therefore represents progress for both Transnet and the wider economy.

However, the company had targeted 180 million tonnes for the financial year.

The actual result was therefore below its target.

This means that although rail performance improved, the company still has significant room to increase throughput.

THE GAP BETWEEN CURRENT PERFORMANCE AND FUTURE TARGETS

Transnet's longer-term ambition is considerably higher than the latest 167.9 million tonnes.

The company has set a target of reaching approximately 250 million tonnes of rail freight by 2030.

Achieving that level would require substantial growth from current volumes.

The gap is approximately 82 million tonnes.

Closing that gap will require additional locomotives, reliable wagons, functioning signalling systems, maintained tracks, improved terminals and better coordination between rail and port operations.

It will also require customers to have confidence that Transnet can provide predictable service.

For mining companies, reliability can be as important as headline capacity.

A mine may have enough production to fill trains, but if trains do not arrive consistently, stockpiles can build up and exports can be delayed.

This can affect revenue throughout the supply chain.

Transnet's recovery therefore depends on improving both the quantity and reliability of freight moved.

PRIVATE OPERATORS PREPARE TO ENTER THE RAIL NETWORK

One of the most significant changes underway in South Africa's freight system is the opening of parts of the rail network to private train operators.

Transnet has signed agreements with 11 train operating companies, with the first services expected during the 2026/27 financial year.

The reform is intended to increase the number of companies able to use Transnet's rail infrastructure.

The change separates the function of managing rail infrastructure from the operation of freight trains.

The Transnet Rail Infrastructure Manager, or TRIM, is responsible for managing access to the rail network.

Train operating companies can then use the network under the new access arrangements.

This model is designed to attract additional investment into locomotives and rolling stock while allowing more freight to move by rail.

If successful, the reform could expand capacity without requiring Transnet alone to finance every new locomotive and wagon.

It could also create a more competitive freight logistics environment.

However, the effectiveness of the reform will depend on infrastructure availability.

Private operators still need functioning tracks, signalling systems, yards and terminals.

The opening of the network therefore does not remove the need for Transnet to invest heavily in infrastructure.

R129.1 BILLION INVESTMENT PLAN

Transnet has outlined approximately R129.1 billion in investment over the next five years.

The programme is focused largely on infrastructure maintenance, renewal and expansion.

A substantial portion of the investment is intended to restore ageing infrastructure and improve operational reliability.

The need is particularly urgent in rail.

Years of insufficient maintenance, equipment failures, cable theft, vandalism and other disruptions have affected the reliability of freight corridors.

The investment programme aims to address these weaknesses.

The scale of the planned spending also makes Transnet one of the country's most important infrastructure investors.

The company's investment decisions have consequences across the economy because better logistics infrastructure can support mining, agriculture, manufacturing, automotive exports and retail supply chains.

R23.3 BILLION ALREADY INVESTED

During the 2025/26 financial year, Transnet invested approximately R23.3 billion in capital expenditure.

That was below its original target of around R25 billion.

The investment included infrastructure renewal and other capital projects.

The company has indicated that the majority of its capital expenditure is directed toward maintaining and renewing existing infrastructure, with a smaller proportion allocated to expansion.

This reflects the immediate need to restore assets before attempting to add large amounts of new capacity.

Maintenance is often less visible than major infrastructure construction, but it is essential to keeping transport systems operational.

A railway can have sufficient theoretical capacity on paper but still move less freight if locomotives break down, signalling fails or sections of track are unavailable.

For that reason, asset reliability is a central component of Transnet's recovery strategy.

THE DURBAN TERMINAL DEAL

The partnership at Durban Gateway Terminal represents another major element of Transnet's transformation.

The agreement with ICTSI, an international terminal operator headquartered in the Philippines, transferred management control of the terminal while Transnet retained majority ownership.

The arrangement has introduced private-sector participation into one of South Africa's most important container-handling facilities.

The transaction generated the R12.5 billion accounting gain that significantly influenced Transnet's annual profit.

But its longer-term importance lies in the operational partnership.

The objective is to improve terminal performance through additional investment, international expertise and operational management.

The Port of Durban handles a substantial portion of South Africa's container traffic and is critical to the country's import and export economy.

Delays at the port can affect manufacturers waiting for components, retailers waiting for imported products and exporters seeking to move goods into international markets.

Improving port performance can therefore have consequences well beyond Transnet itself.

CONTAINER THROUGHPUT IMPROVES

Transnet also reported improved container volumes during the year.

Container throughput increased as port operations recovered from some of the severe congestion and operational difficulties experienced in previous periods.

The improvement is important because containerised cargo includes a wide range of manufactured and consumer products.

Efficient container movement is essential for South African businesses participating in global supply chains.

Automotive manufacturers, retailers, food producers, electronics businesses and industrial companies all depend on predictable import and export logistics.

If containers remain at ports for long periods, businesses may face higher storage costs, production interruptions and delays in receiving goods.

Improving throughput can therefore support the wider economy even when the immediate financial benefit to Transnet is difficult to quantify.

PIPELINE VOLUMES ALSO INCREASE

Transnet's pipeline business recorded an increase in volumes during the year.

Pipeline volumes rose by 6.9% to approximately 14.3 billion litres.

The pipeline network transports petroleum products and other liquids.

Pipelines can provide an important alternative to road transportation for large volumes of fuel and related products.

The system reduces the need to move large quantities of petroleum products by tanker trucks over long distances.

A reliable pipeline network can therefore support fuel security while reducing pressure on road infrastructure.

The increase in pipeline volumes contributed to the broader improvement in Transnet's revenue.

DEBT REMAINS A MAJOR CHALLENGE

Despite the return to profit, Transnet's financial position remains under pressure.

The company's total debt was approximately R150.7 billion.

That level of debt means a significant portion of Transnet's financial resources must be directed toward debt servicing and financial obligations.

The company has received government support and guarantees that have helped strengthen liquidity.

However, long-term sustainability depends on improving the operating performance of the business rather than relying indefinitely on extraordinary financial support.

Higher freight volumes can improve revenue.

Better asset utilisation can reduce the cost of moving each tonne.

Improved procurement and maintenance can reduce inefficiencies.

Private-sector participation can provide additional investment.

Together, these measures are intended to strengthen Transnet's financial position over time.

THE IMPORTANCE OF RAIL TO SOUTH AFRICA'S ECONOMY

South Africa's economy is particularly dependent on freight logistics because of the geographical distance between many mines, factories, farms and ports.

The country's mining industry provides a clear example.

Large quantities of minerals must move from inland mines to coastal export terminals.

Rail is generally more efficient than road transport for very large volumes over long distances.

When rail capacity falls, road freight can absorb some of the demand, but this can create additional costs.

More heavy trucks can increase congestion, road maintenance requirements and fuel consumption.

It can also increase pressure on major highways.

A stronger freight railway can therefore support the competitiveness of South African exports.

This is especially important because South Africa competes with producers in other countries where logistics infrastructure can determine whether commodities reach international markets at competitive costs.

THE MINING SECTOR IS WATCHING CLOSELY

Mining companies have a direct interest in Transnet's recovery.

Mineral exports generate significant foreign exchange earnings for South Africa, while mining supports employment and a large network of suppliers.

When rail and port constraints limit exports, mines may reduce production or accumulate stockpiles.

This can affect company revenues, government tax receipts and regional economic activity.

Improving freight capacity could therefore help unlock production that is already possible but constrained by logistics.

The planned entry of private rail operators could also create new options for mining companies.

However, the transition will take time.

Operators must acquire or lease locomotives, secure operating approvals, employ technical personnel and establish commercial relationships.

Infrastructure managers must allocate network capacity while maintaining safety standards.

AGRICULTURE AND MANUFACTURING ALSO DEPEND ON LOGISTICS

The logistics challenge extends beyond mining.

South Africa's agricultural exporters depend on ports and railways to move fruit, vegetables and other products to international customers.

The automotive sector similarly relies on imported components and exports finished vehicles through ports.

Manufacturers require reliable delivery of raw materials and machinery.

Retailers depend on imports arriving within expected timeframes.

Consequently, improvements in Transnet's performance can potentially reduce costs across multiple sectors.

The effect is not immediate in every case.

Businesses make supply-chain decisions months or years in advance.

But sustained improvements in reliability can influence future investment decisions.

An international company considering a manufacturing plant may assess electricity supply, labour availability, market access and logistics.

A reliable transport system can strengthen the overall investment proposition.

GOVERNANCE AND PROCUREMENT REMAIN IMPORTANT

Transnet's financial recovery is also taking place alongside efforts to improve governance.

The company has been investigating procurement matters and has taken disciplinary action against officials and companies implicated in alleged irregularities.

Procurement is particularly important because Transnet spends billions of rand on infrastructure, equipment, maintenance and services.

A large infrastructure budget creates opportunities for legitimate businesses but can also create risks if procurement systems are weak.

Strong governance is therefore necessary to ensure that infrastructure investment produces the intended operational improvements.

Transparent procurement can also improve confidence among lenders, investors and suppliers.

For a state-owned company with substantial debt and a major national economic role, governance performance is closely connected to financial sustainability.

SECURITY OF RAIL INFRASTRUCTURE

Cable theft, vandalism and infrastructure damage remain major operational concerns.

Rail networks require extensive signalling, communications and electrical infrastructure.

When cables are stolen or equipment is damaged, trains can be delayed and sections of the network may have to operate under restricted conditions.

Transnet has increased security measures in response.

The company has also worked with law-enforcement agencies and other stakeholders to address infrastructure crime.

Security spending is nevertheless an additional cost.

Preventing theft can be cheaper than repeatedly replacing damaged infrastructure, but it requires continuous monitoring and enforcement.

The security problem therefore forms part of the broader operating environment in which Transnet is attempting to recover.

WHAT THE RETURN TO PROFIT REALLY MEANS

The R4.6 billion profit is an important financial milestone, but the underlying picture is more complicated.

The company has improved rail and pipeline volumes.

Revenue has increased.

Port performance has shown signs of recovery.

Private-sector participation is expanding.

The rail network is being opened to additional operators.

Large infrastructure investments are planned.

At the same time, Transnet's debt remains high, operating costs increased faster than revenue, and rail volumes remained below the company's target.

The R12.5 billion gain associated with the Durban terminal transaction also played a substantial role in the reported profit.

This means the company still has considerable work to do before its financial recovery can be considered fully established.

The next few years will show whether operational improvements can generate sustained profits without relying on major asset transactions.

THE ROAD AHEAD

Transnet's next phase will focus on turning its recovery programme into sustained improvements in freight volumes and reliability.

The company needs to maintain existing infrastructure while expanding capacity where demand is strongest.

The entry of private train operators will test the new rail-access model.

The Durban terminal partnership will test whether private-sector participation can translate into measurable improvements in port performance.

The R129.1 billion investment programme will test Transnet's ability to execute major infrastructure projects while maintaining strong financial controls.

And the company's debt position will continue to require careful management.

The outcome will matter well beyond the company's balance sheet.

South Africa's ability to export minerals, manufacture vehicles, support agriculture and participate in international trade depends partly on the efficiency of its freight system.

A CRITICAL TEST FOR SOUTH AFRICA'S LOGISTICS SYSTEM

Transnet's return to profitability provides a significant development in South Africa's long-running freight logistics reform programme.

The company has moved from a R1.9 billion loss to a R4.6 billion profit in one year, while revenue increased to R88.6 billion and rail volumes rose to 167.9 million tonnes.

But the figures also show why the recovery is not complete.

The company remains heavily indebted.

Operating costs are rising.

Rail volumes remain below target.

Infrastructure needs extensive renewal.

And the economy continues to depend on Transnet improving its ability to move freight reliably.

The next stage will therefore be less about a single annual profit figure and more about whether the company can maintain operational gains year after year.

If rail volumes continue to rise, ports become more efficient, private operators successfully enter the network and infrastructure investment improves reliability, the benefits could extend throughout the South African economy.

If those improvements fail to become sustainable, the company could continue to face pressure despite individual financial gains.

For now, the R4.6 billion profit marks a significant change in Transnet's financial trajectory, while the company's ambitious investment programme and logistics reforms will determine whether that improvement becomes a durable turnaround.

The coming years will be particularly important as South Africa attempts to increase freight capacity, attract private investment into logistics and strengthen the infrastructure needed to support long-term economic activity.BU