Transnet's three-year recovery plan books its first profit in four years (interview)
CEO Michelle Phillips reports a R4.6bn FY2026 profit against last year's R1.9bn loss and rail volumes up 4.9% — but says the turnaround is far from over.
What was changed
In an interview with The National, Transnet Group CEO Michelle Phillips said the state freight group's three-year-old recovery plan is finally producing measurable results: a R4.6 billion profit for the year ended 31 March 2026, against a R1.9 billion loss the previous year — the first profit in four years. The results, tabled ahead of a 6 October appearance before Parliament's Portfolio Committee, show revenue up 7.1% to R88.6 billion and rail volumes up 4.9% to 167.9 million tons.
Phillips attributed the volume recovery to network rehabilitation, better maintenance execution and asset availability rather than any single deal, and pushed back on commentators crediting only the Durban Gateway Terminal transaction — Transnet sold a 49.999% stake to the Philippines' ICTSI for R10.5 billion, booking a R12.5 billion profit on disposal — saying the improvement shows up 'all around in terms of our volumes, across the port and rail operating divisions'.
The structural core of the plan is private sector participation without privatisation: 'Transnet will remain state-owned,' Phillips said, noting private terminal operators have run inside South African ports for over two decades. What is new is rail — Transnet Freight Rail's accounting separation into an operating company and an infrastructure manager (TRIM) is complete, Rail Access Agreements are signed with 11 train operating companies, the first due to run in 2026/27, and Treasury approved R14.8 billion in grant funding toward the R129 billion five-year capital programme.
Phillips was candid about what still drags: finance costs of roughly R15 billion and depreciation of about R23 billion 'wipe out' most operating earnings; the R150 billion loan book means 'if this was a business that did not have the R150bn loan... this business is profitable immediately'; and over 5,000 incidents of cable theft, sabotage and vandalism cost an estimated R1.7 billion in the year. The state-capture-era 1064-locomotive saga also remains unresolved with supplier CRRC.
Why it worked
The turnaround was proven with an audited-style bottom line — first profit in four years — rather than declared through milestones, which is what makes the plan credible.
Private sector participation was framed as continuity (private terminal operators have worked South African ports for decades), defusing the privatisation objection from labour.
Unbundling the rail accounts into operator and infrastructure manager is the precondition for the 11 signed train-operating-company access agreements.
Applying — not asking — for Treasury's Budget Facility turned R14.8 billion of grant funding into borrowed-money avoided, attacking the R150 billion debt drag.
What can be applied
A distressed state monopoly recovers through arithmetic first — volumes, maintenance, asset availability — then structure: private participation, debt discipline. Prove it with a P&L, not milestones.
Aftermath
The results were due before Parliament's Portfolio Committee on 6 October 2026. Phillips expects debt to have peaked and to decline 'quite substantially' as guarantee renegotiations lower interest costs and disposals of surplus residential properties and non-core assets free up cash; coal volumes are targeted past 60 million tons toward 65 million. The recovery plan's volume targets were deliberately built assuming no CRRC resolution, and Transnet and the Special Investigating Unit are preparing answering affidavits to CRRC's interlocutory applications.