Are SA parastatals making money?

While South Africa’s state-owned companies are paying their top executives millions of rands in salaries and bonuses, operationally and financially, its a mixed bag.

BusinessTech looks at the financial performances of some of the country’s largest parastatals in the latest financial year, amid scandal and ongoing operational challenges.

The figures below are taken from the latest available full year reports as published by the SOEs.

Eskom – Profit

Eskom Revenue vs ProfitEskom reported a net profit of R7.1 billion for the year ended March 2014, up from R5.2 billion in the previous year.

Revenue for the year increased to R139.5 billion from R128.8 billion in the previous year.

Despite ending the financial year in the black, the power utility remains severely financially strained, with billions of rands still owed to it from non-paying municipalities. The group is said to need over R250 billion more in funding as it continues to battle load-shedding.

The company also warned last month that it would need to trim its staff content.

Telkom – Profit

Telkom Revenue vs ProfitTelkom has spend the past year executing a turnaround strategy to bring the telecoms group back to profitability.

In the financial year ending March 2014, the group managed to post an operating profit of R4.6 billion, from a prior loss of R11.15 billion in 2013.

The improvement has come at a price, however, as the group has spent the past year downsizing its staff contingent – particularly at management level – and has faced opposition from unions at every turn.

Rand Water – Profit

Rand Water Revenue vs ProfitDespite “technical glitches” leaving thousands of South African homes without water earlier this year, Rand Water remains a profitable parastatal.

The company posted a profit of just under R1 billion in the last financial year, off of revenues of R7.75 billion – up from R6.83 billion the year before.

SAA – Loss

SAA Revenue vs ProfitSouth Africa’s worst performing SOE, airline SAA posted a R1.17 billion loss in the latest financial year, up from a loss of R789 million previously.

It is no secret that the national airline is in serious trouble, with management banking on a bailout from government to save it from going under.

Sentech – Profit

Sentech Revenue vs ProfitState owned signal distributor, Sentech, received its first clean audit in over a decade for the 2012/2013 financial year – the same year it posted a R177 million profit on R831 million in revenue.

In the 2013/2014 financial year, while revenue was up at the group (to R1.06 billion), profits were down (to R71 million).

The group also faced strike action from workers in the year, demanding higher salaries.

Transnet – Profit

Transnet Revenue vs ProfitRail, ports, and pipelines parastatal Transnet showed positive results for the 2013/2014 financial year, recording a profit of R5.2 billion.

Revenue grew to R56.6 billion, driven predominantly by a 14.2% increase in minerals and chrome volumes and a rise in automotive volumes and containers on rail.

The group’s most recent performance is in stark contrast to its operations in the past, particularly in the mid-90s when the entity was on the brink of collapse.

Despite its profitability, the group could not avoid a credit ratings downgrade along with all South African utilities in June 2014.

Broadband Infraco – Loss

Broadband Infraco Revenue vs ProfitState-owned broadband infrastructure company Broadband Infraco has always run at a loss – and according to its CEO, Puleng Kwele, without massive investment from government, it won’t post a profit any time soon.

In 2013, the group suffered a R181 million loss, according to its reports, following the trend of losses: R95 million in 2012; R206 million in 2011; and R40 million in 2010.

Kwele has previously noted that the company would need R100 billion from government in order to meet its broadband infrastructure mandate.

SABC – Profit?

SABC Revenue vs ProfitSouth Africa’s public broadcaster has been mired by ongoing claims of corruption and maladministration for years.

In it’s 2014 financial report, the group reported a R651 million profit after tax – however, most conversation from the group’s financials revolved around exorbitant salaries paid to the group’s controversial COO, Hlaudi Motsoeneng.

The group received a qualified audit for the year, indicating more was at fault in the broadcaster ‘s financials than the reported R3.5 billion “irregular expenditure” noted by the auditor general.

SAPO – Loss

SA Post Office Revenue vs ProfitCash-strapped and hit by labour strikes, the South African Post Office was described as being “in a crisis” this year.

The group has been unable to combat the rise of technology and its impact on its main business (which accounts for 65% of its total revenue) – and hit such financial lows that, at a stage, it was uncertain whether the group could even pay salaries.

SAPO is running at loss, finishing its last financial year R178 million in the red. Notably, the group also reported irregular spending of R2.1 billion.

SA Parastatals revenue and profits/loss

Company Revenue Profit/Loss
Eskom R139.5 billion R7.1 billion
Transnet R56.6 billion R5.2 billion
Telkom R32.5 billion R4.6 billion
Rand Water R7.75 billion R997 million
SABC R7.07 billion R651 million
Sentech R1.06 billion R71 million
SAPO R5.7 billion (R178 million)
Broadband Infraco R237.4 million (R181 million)
SAA R27,1 billion (R1.17 billion)

More on state owned companies

State-owned company CEO salaries

Widespread corruption at SABC: report

SA Post Office fingered for R2.1 billion irregular expenditure

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Are SA parastatals making money?