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Eskom interim profit plunges 89% from year ago

Situation likely to deteriorate further in second half.

Eskom’s first-half profit plunged 89% and the situation at the South African state-owned power utility is likely to worsen in the next six months, Chairman Jabu Mabuza said.

Profit plunged to R671 million in the six months through September from R6.3 billion a year earlier, while finance costs rose to R15.2 billion from R11.9 billion, the company said in a presentation in Johannesburg on Wednesday.

The company’s debt burden is “impossibly high,” Mabuza said, even as it reported improved liquidity and announced that 73% of funding for 2018-19 is secured. “We’re not selling enough electricity’’ in order recover costs, he said, saying sales volumes dropped 0.8% in the period. “Eskom is in a state of severe financial difficulty.’’

Eskom is struggling with high debt and declining demand as it takes steps to emerge from multiple scandals involving graft and mismanagement. In the meantime the threat of blackouts looms, which would add pressure on the economy that plunged into a recession earlier this year.

Read: Lawmakers refer Eskom chairmen for criminal probe

The utility has experienced low coal stocks, and costs for the fuel rose by 7% during the first half. Power from independent producers increased 29%, mainly due to volumes being higher. A higher-than-planned wage settlement earlier this year is weighing on the balance sheet, it said.

Acting Chief Financial Officer Calib Cassim was appointed to the role on a permanent basis.

© 2018 Bloomberg L.P

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20000 extra employers, a few bonuses paid and NO definite action results on a loss. Did the finance department not see this coming?? budgets and real expenditure.

If you do not have solar and a genny you are definitely “futurely disadvantaged” !!!

no no no! Government is gonna tax you heavily for generating your own power in the very near future!

How is their debt collection department progressing I wonder? That must still be “weighing on the balance sheet”? Bad debt write offs? Those two items should be made to feature among the bonus award KPIs.

Wait, so these guys take over from Brian Molefe and others and profits fall from R6 billion to R671 million?

R6 billion to R600 million? If this was private company and not even a listed company the guys would have presented the figures as well as their resignation letters.

What is this?

Did you intentionally try to miss the part where the article mentions that borrowing costs went up by 3.3B? From 11.9B to 15.2B

So cleaning up Molefe’s mess is proving to be a expensive one.

You know that it is them who borrowed the extra funds and incurred the extra charges not the Molefe brigade isn’t it? And if there were borrowings that would have went hand in hand with some expansion of some sort. I remember the new CEO telling everyone they needed extra cash and were doing some cuts and so on and so forth.

This is unjustifiable mismanagement.

@Zinger

I’m not sure if you are trying to misdirect or if you just don’t know what you are talking about.

The bulk of the debt that Eskom has is related to the new build plants which are drastically over budget and hence the need for more debt. The current management had nothing to do with that. Molefe, Koko and co should be jailed for the way those projects were procured and managed.

Lastly, you don’t have many options other than to source debt if your revenue is drying up and your costs are rising,

Well if you come to a press interview dressed like your a mob boss on holiday… What did SA expect?

Scandalous results. But then the new MD may be cleaning out the mess of the past. Really looks like a banana republic here. In one day Eskom profit drops by nearly 90%, the EFF accuses Pravin of having a USD48 million account and SAA begs for another couple of billion to keep losing more money.

Clearly the ANC lacks the ability to run a country-yet the voters cannot see this! Now where is the real problem?

Sadly, the average voter in this country of ours is as thick as the proverbial brick.

The man needs a gangster image otherwise how is he going to have any street cred with this Government!

It must be tough making a profit when most of your customers are given your product for free and a bunch of others just don’t pay for it.
If that was my business plan I wouldn’t have a business. Bankrupt long ago.

I am convinced this regime has a maximum IQ requirements for employees.

I have never seen a monopoly run out of money like SA regime institutions..never

Free electricity was promised since 1994… socialism at its best. Stop paying taxes people! You are just feeding the hungry

Of course sales will drop, what a surprise! Eskom increases prices and then asks people to use less electricity. Then their income drops and then they increase the prices to make up for the loss, and then they ask that people should use less electricity. This is crazy talk. They also entertained the idea of more nuclear power stations. It’s not even a clever pyramid scheme. Everyone should get of the grid and be independent as far as power is concerned. Today this is easier than 80 years ago, and 80 years ago people lived off the grid. Electricity is just a commodity like any other commodity, except it has been granted holy preferential and protected status by societal manipulators. It’s just a bunch of electrons running from one end to the other, nothing more nothing less. Eskom’s demise is of their own design, with the help of their friends.

“We’re not selling enough electricity” yet there is load shedding Mr. Mabuza? What a poor excuse. How do you propose selling more electricity if you can’t generate it? Why does Eskom have double the employees compared to 10 or 15 years ago and generate less electricity? Yet absolutely nothing get done in this regard and Eskom & ANC crumbles and gives in to being held at gunpoint by Unions and inflated wages.

All the illegal connections all over the place? – too scared to do anything. Recoup money from all the non paying customers and municipalities? – too scared to do anything. Rather milk the diminishing taxpayer base as the main strategic plan of the monopoly called Eskom

The apocryphal “Tale of two letters” from 1982 Washington Post article by Mark Shields sums it up nicely. “My predecessor” or “the previous government” will be presented as perpetual scapegoats, and everyone will be expected to give the replacement another shot while the incumbent leaves with a pat on the back and back pocket stuffed full of taxpayer cash. And then repeat it all again….Appoint, steal, fail, repeat. Until these self-serving agents of greed and division are radically subdued by law and order, charged and imprisoned, these elements will continue to cause state organ failure to the point where it cannot be resuscitated. Playing politics while SA burns….in the dark…

I’m surprised they are even profitable….

Well, they do have a 95% monopoly.

In the ANC’s books, an 89% plunge in interim profits for Eskom is a pass and worthy of dissing out bonuses to all the Eskom management.

This plunge and the plunge on the consumer confidence index are reflective of the ANC’s inability to lead the nation and an indication of their corruption.

No wonder they want you to register your solar panels…

Anyone ready for sun tax?

Solar tax? If ever a political party wanted to commit suicide, an attempt at solar tax must be made. That would be way beyond immoral. Way beyond…

In the WC you have to register solar panels otherwise a hefty fine. Why? We are living in our own crazy little world. Lol.

UK effectively did that – look up daylight robbery (window tax)

SA government be like ‘hold my beer’…

Well, it kind of almost makes sense, as someone who actually has grid tie system let me explain:

I generate around 70% of the power I consume, so I only buy 30% of my usage from Eskom, but the distribution network still costs Eskom exactly the same, traditionally distribution costs would have been covered with a increase in sales, but now, there is less sales with the same amount of homes connected.

As people have mentioned before, Eskom really needs to be split into 2 different businesses, Distribution and generation, and if they really want to ease the load we are putting on our coal stations, they should allow us to feed in and do net metering, hell, I would feed in my excess PV for free at this stage if Eskom allowed it, its just free power sitting on my roof, dissipating as heat.

We are not selling enough electricity he said. That is because you have essentially priced yourself out of the market and are not having those stealing from you thrown in jail! Its not rocket science or even business for beginners and small children 101.

Eskom is not going to turn it easily around: it’s the “cause and effect” of 24 years of a policy that has a economic disconnect…err, how can I put it…??

…RW Johnson stated it best is his book How Long Will SA Survive the Looming Financial Crisis :
“…one of SA’s 4 structural problems, is that one cannot have a disconnect between employee-performance/work output and related remuneration”. “…no economy can survive that”

RW Johnson book’s name can just as well be titled: “How Long Will ESKOM Survive the Looming Crisis?!”

Quote Sep’2017 on Fin-24: “Like most African countries, SA is ruled by a bureaucratic elite practicing nepotism and that leads to a bloated civil service,” said Johnson.

The Zuma legacy.

It will take 50 years of hard work(Tax payer money) to undo his MIDAS touch.

Believe it or not Mr. Zuma is still not in jail!

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