Hooked on economics: Grindrod's Xolani Mbambo
Grindrod's CFO believes in dynamic and diverse finance teams, which is aligned to the group's strategy.
Xolani Mbambo is the CFO at Grindrod, a large and listed holdings company. In the face of volatility, unbundling, and even closures, he keeps his eye on strategy as his north star – despite joking that he found his way into finance “by chance”.
What are the focus areas in your current role?
In June 2018, Grindrod separately listed its shipping division on the NASDAQ, officially splitting it from Grindrod. As a result of this, my focus has been, and still is, to support bulking up of the remaining freight services division and the diversification of its commodity and customer portfolio. We are also focusing on optimising trade logistics corridors in which we operate, looking to improve bidirectional cargo flows. We already own or operate strategic logistics assets along the corridors in which we operate, which gives us an advantage.
What opportunities and challenges are you faced with in the current industry?
The challenges we face include increased mining commodity price volatility, commodity and customer concentration, sovereign risks in the countries in which we operate – particularly Mozambique and Zimbabwe – and ever-changing regulatory environments.
Our opportunities include oil and gas potential in Mozambique. In addition, exiting from shipping has strengthened our balance sheet, and we became net cash positive at the end of the financial year 2018. This gives us an opportunity to upscale our freight services business inorganically through healthy gearing.
You've recently issued a strong earnings report and share prices soared. What was the strategy behind this?
As indicated in our 2018 annual results, a strong refocus on our freight services businesses coupled with consistent earnings growth in financial services and a buoyant performance from agricultural logistics and marine fuel trading businesses, all underpinned our earnings improvement. We highlighted, though, that the results included a historical take-or-pay receipt from the Zimbabwe government for a fuel delivery agreement, which may not be repeated. The challenge we face going forward is to further lift the share price performance to narrow down the current share price discount to our net asset value.
What was your hardest day professionally? Or your toughest lesson?
My hardest ‘day’ professionally was in fact over six months – when I administered the closure of our rail locomotives assembly plant in Pretoria, which saw job losses of over 500. This was a painful experience; and significant shareholder value was also lost in this process.
How did you choose a career in finance?
It was by chance that when I had to choose between science and commerce classes in standard eight (grade ten) I opted for a commerce class; we were not allowed to do both subjects going into matric. When I got exposed to accounting and economics subjects, I got hooked and never looked back.
What makes a great CFO?
A great CFO is dynamic. He delivers on traditional routine finance activities without fail, but his game-changing ‘value-add’ is in understanding the strategy of the business and aligning the finance resources to drive and support the strategy.
What is your leadership style?
I believe in dynamic teams, using their varying skill set and diversity to achieve optimal results.
Where do you see yourself in five years time?
Growing into a CFO role of a large market cap sized listed or equivalent unlisted business.
What are your interests outside of work?
I have a keen interest in running, and have completed eleven Comrades marathons, three Two Oceans, and a fair number of standard marathons over the years since 2001, including Soweto, London, Paris, Edinburgh and Berlin. My to-do bucket list includes the Boston and New York marathons.
What advice would you give to your younger self?
Once you have chosen your path put all the energy to it, do not be split-minded. That way you chances of success are high. But if it does not work out, learn from it and move on.