Eskom first half profits fall 89%; and likely to worsen in second

By Hilton Shone

(Bloomberg) – Eskom Holdings SOC Ltd.’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 R671m ($48m) in the six months through September from R6.3bn a year earlier, while finance costs rose to R15.2bn from R11.9bn,the company said in a presentation in Johannesburg on Wednesday.

Eskom chairperson Jabu Mabuza
Jabu Mabuza, chairman of Eskom Holdings SOC Ltd., left, gestures as he speaks during the future of South Africa conference in Cape Town. Photographer: Halden Krog/Bloomberg

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.’’

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.