Eskom Forecasts First Profit Since 2017 After Record Loss

AFRICAN BUSINESS AND ECONOMYDecember 20, 2024 at 9:03 AM UTC

TLDR

South Africa’s Eskom Holdings SOC predicts a profit of over 10 billion rand ($548 million) for the fiscal year ending March 2025
That would mark its first profit since 2017 and comes despite a record 55 billion-rand loss in the prior year
Municipal debt remains a major concern, with outstanding payments rising to 95.4 billion rand in November

South Africa’s Eskom Holdings SOC predicts a profit of over 10 billion rand ($548 million) for the fiscal year ending March 2025, marking its first profit since 2017.

This comes despite a record 55 billion-rand loss in the prior year, driven by severe power outages and a 36.6 billion-rand hit from the unbundling of its transmission business. Eskom’s improved financial outlook follows a recovery in electricity generation, with no scheduled power outages since March.

Earnings before interest, tax, depreciation, and amortization (EBITDA) rose 26% to 43.4 billion rand in fiscal 2024, while the pre-tax loss narrowed to 25.5 billion rand. Municipal debt remains a major concern, with outstanding payments rising to 95.4 billion rand in November, a 28% increase since March.

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Key Takeaways

Eskom’s projected return to profit reflects operational improvements and investor confidence, as evidenced by declining yields on its Eurobonds. However, the utility faces significant challenges, including mounting municipal debt and a massive 834 billion-rand capital expenditure requirement over the next decade. CEO Dan Marokane sees an opportunity for reinvention amid growing private-sector participation in power generation. Sustained improvements will be critical to positioning Eskom as a viable utility in a shifting energy landscape. The recent stability in electricity supply offers hope for economic recovery, but Eskom’s long-term viability hinges on addressing its financial and operational hurdles while adapting to South Africa’s evolving energy market.

South Africa

Eskom

Finance

Business

Economy

Utility

Power Supply