(Bloomberg) -- South African power utility Eskom Holdings SOC Ltd. forecast a return to profit for the first time since 2017 even as its loss for the most recent financial year more than doubled.
The company projected an after-tax profit of more than 10 billion rand ($548 million) for the 12 months through March 31, 2025, after posting a 55 billion-rand loss in the previous fiscal year.
The steep loss was anticipated after the utility implemented record power outages caused by failures at poorly maintained generating facilities. But more recently it has delivered a much-improved electricity performance, with no scheduled power outages — known locally as loadshedding — since March.
“It’s looking positive,” Chief Financial Officer Calib Cassim said in an interview. “But our biggest worry at this point is this ever-growing rate of municipal debt and nonpayment.”
South Africa’s municipalities — marred by years of mismanagement — owed Eskom 95.4 billion rand by November, 28% more than what was outstanding at the end of March.
The utility has made significant repairs to its largely coal-fired fleet of plants that generate almost all of South Africa’s electricity, preventing outages for almost nine straight months.
The power cuts still took a significant toll on the economy — as much as 899 million rand per day, according to central bank estimates — and were a big reason why the ruling African National Congress lost its majority in this year’s elections.
A large chunk of the increase in bottom line losses for 2024 was due to a 36.6 billion-rand hit caused by the unbundling of Eskom’s transmission business, which forced the company to “derecognize” a previously reported deferred-tax asset.
The loss before tax shrank to 25.5 billion for fiscal 2024 while earnings before interest, tax, depreciation and amortization rose 26% to 43.4 billion rand.
Investors responded positively to the improved cash flow and outlook, with yields on the company’s 2028 eurobonds declining by 2 basis points to 6.78% by 12:43 p.m. in Johannesburg.
Chief Executive Officer Dan Marokane, who took over the role in March, has said the utility has the opportunity to reinvent itself, signaling that the century-old, state-owned monopoly can still thrive despite growing private-sector participation in power supply.
The company forecasts it needs an 834 billion rand over the next decade for capital spending. That includes an average of 45 billion rand annually to expand its generation and another 31 billion rand a year to sustain its operations.
The figures exclude 449 billion rand of capex that National Transmission Company South Africa needs over the same period, as well as 162 billion rand for distribution, it said.
--With assistance from Paul Burkhardt, Robert Brand, Rene Vollgraaff and Ana Monteiro.
(Updates with municipal-debt figures in fifth paragraph.)
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