Ellies targets capitalising on solar energy

Electronics group Ellies, whose turnaround strategy returned it to profitability in the six months to end-October, is focusing on growing its solar energy business to reduce its reliance on pay-TV operator MultiChoice.

The strategy is boosted by difficulties experienced at Eskom. Ellies makes and installs DStv satellite dishes.

Group CEO Shaun Prithivirajh said Ellies maintains a strong relationship with MultiChoice, which is traditionally the firm’s largest revenue earner.

“It ’ s still a part of our business, but our reliance on it as a revenue stream has decreased as we have adopted more of our marketing, sales and operational strategies towards solar. We believe that’s a big play for Ellies,” he said.

The company, which also makes electrical cables and plugs, has about 3,000 DStv installers across SA and sells a range of related products in addition to installation services.

Prithivirajh saidMultiChoicerelated products and services account for about half of Ellies’s business. “At one time it was more than 80% of our business. It ’ s now around 50% of our total revenue.”

With national power utility Eskom unable to reliably meet electricity demand, sales of alternative and back-up energyrelated products at Ellies have risen. “A big contributor to our business has been the inverter trolleys that had a 58% increase on the previous year,” Prithivirajh said.

However, traditional inverters, which have batteries to power electronics, still rely on Eskom power to be charged, so Ellies is bringing in a device that can be charged using solar energy.

Prithivirajh said Ellies is working with other partners to give consumers and businesses affordable options for buying equipment. The upfront costs of setting up solar systems have been prohibitively high for many South Africans.

Ellies has made efforts to retrain its network of installers to do fibre-to-the-home internet installations through a partnership with telecoms operator Vox. This is another move by the company to diversify its revenue streams.

This comes as the electronics group reported on Friday that it had returned to profitability during the six months to endOctober due to improvements in the way it handles its logistics, as well as reduced loss at its embattled manufacturing division.

Revenue increased 1.9% to R656.7m. Earnings before interest, tax, depreciation and amortisation for the reporting period soared 1,261.3% to R33.4m from R2.5m previously.

Headline earnings per share, which strips out the effects of one-off financial events, jumped 181.6% to a profit of 2.37c, compared with a loss of 2.91c in the six months to end-October 2019. No dividends were declared for the period.

Ellies stock, which tends to be volatile, is trading 37.5% higher for the year. Despite some movement on Friday, the share closed unchanged, giving the group a R68.22m market capitalisation.