Eskom posts R9bn interim profit, but still expects full-year loss

ESKOM reported a 4 000% improvement in net profit for the six months ended in September.

The power utility reported a R9,2 billion interim profit for the six months ended in September, but still expects to incur a R9,1 billion loss when the financial year ends in March.

“I’m very pleased to say our financial results show improvements across all key profitability metrics,” Eskom chief executive André de Ruyter said during the utility’s half-year results presentation on Wednesday.

The R9,2 billion net profit is an improvement of over 4 000% from the R216 million profit recorded in the comparative period.

Eskom earnings, too, were up a massive 58% to reach R44,8 billion, helped along by an 8% growth in electricity sales volumes and a 15% tariff increase in the period under review.

Gross debt also decreased by 15% to R392 billion, down from R463 billion in the comparative period.

The utility’s gearing ratio has decreased from 72% to 61%.

“This is not where we want to be as Eskom to ensure sustainability, but I think it’s a great start in the right direction,” said chief finance officer Calib Cassim, noting that certain key metrics are clearly now improving, as the utility’s assets for the first time in a long time now exceed its liabilities.

The projected year-end loss of R9,1 billion considers that the first half of Eskom’s financial year tends to be better than the second because it spans the winter months when there are higher electricity sales and tariffs.

The utility has also tended to incur lower primary energy and maintenance costs over this period.

The utility also managed to keep coal costs down.

“This breaks a trend over a number of years of double-digit increases in the cost of coal,” De Ruyter said.

Primary energy costs went up 14% with the key cost driver being the use of diesel for emergency turbines in a bid to keep the lights on.

As at the end of September, Eskom’s plant availability declined to 65%, down from 67,8% in the comparative period.

While load shedding was severe with some 427 GWh in energy shed, it was in fact slightly better than the 443 GWh recorded for the six months to September last year.