This will be achieved through the group’s Profit Maximisation Programme (PMP), which aims to change Eskom\u2019s financial position through turnaround initiatives focused on five main areas: <\/p>\n\n\n\n
- \n
- Revenue growth, <\/li>\n\n\n\n
- Cost efficiency, <\/li>\n\n\n\n
- Primary energy optimization, <\/li>\n\n\n\n
- Digital transformation and <\/li>\n\n\n\n
- Capital productivity<\/li>\n<\/ul>\n\n\n\n
The PMP is primarily a 2-year initiative, with savings targets set to expedite the business to break even in year 1, reach profitability in year 2 and be financially sustainable in the subsequent years.<\/p>\n\n\n\n
To break even in 2025, Eskom’s board has approved R16.2 billion in additional cost-saving measures, which mainly focus on “quick wins” while mitigating high risks with additional initiatives\u2014such as continued savings on Open-Cycle Gas Turbines (OCGTs), reducing municipal debt and electricity theft, and finding new revenue opportunities.<\/p>\n\n\n\n
If these can continue into the next financial year, Eskom estimates it could return to profitability in FY2026 at around R12 billion.<\/p>\n\n\n\n
Further out, it’s targeting a sustainable profit margin of around 10%, “future-proofing” the business without having to rely on double-digit tariff increases.<\/p>\n\n\n\n
Current financial performance<\/strong><\/p>\n\n\n\n
What the group projects and how it is currently operating are not entirely on the same page, however.<\/p>\n\n\n\n
At 31 August 2024, Eskom managed to achieve savings of R9.2 billion through the PMP, but this was against the target of R10.2 billion, which is R1 billion below target.<\/p>\n\n\n\n
Looking at the actual financials, the group is still operating in the red.<\/p>\n\n\n\n
In the first quarter ending June 2024, Eskom’s pre-tax loss <\/strong>narrowed by R6.7 billion to R200 million<\/strong>, aided largely by significant tariff hikes of around 13% for direct customers from April 2024.<\/p>\n\n\n\n
Earnings before interest, taxation, depreciation and amortisation (Ebitda) improved by around 100%, and revenue was up 15%.<\/p>\n\n\n\n
The group noted that its debt securities and borrowings were R8.1 billion lower\u2014although the total remains staggeringly high at R445.5 billion. Another black spot marring the otherwise positive results is the drop in sales volumes, which are 1TWh lower.<\/p>\n\n\n\n
Based on the Q1 forecasting, Eskom said that it could show a significant R7.8 billion improvement on its forecast pre-tax loss for the year – R1.1 billion<\/strong> against the budgeted loss of R8.9 billion, an improvement of R7.8 billion.<\/p>\n\n\n\n
![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/Eskom-finance-Q1-2025-1024x471.jpg\")
<\/a><\/figure>\n\n\n\nEskom attributes the turnaround to concerted efforts to improve generation and contain its costs\u2014the latter of which is yielding savings of approximately R20 billion per annum.<\/p>\n\n\n\n
It has reduced its primary energy spending by 9.7% and has cut the use of costly OCGTs\u2014which were used excessively over the past two years because of load shedding\u2014by 70%.<\/p>\n\n\n\n
Total OCGT costs year to date are sitting at R3.5 billion versus the R10.2 billion spent in the same period in 2024. <\/p>\n\n\n\n
On the generation side, the maintenance strategy has paid off, bringing energy availability (EAF) in the range of the 65% target set for 2024, with around 4,000MW more available than during the worst of load shedding in 2023.<\/p>\n\n\n\n
The group anticipates close to 3,000MW more being brought back online by March 2025 (FY2025), which would put it in the range of the 70% EAF target set for then.<\/p>\n\n\n
![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/10\/EAF-2025-1024x707.jpg\")
<\/a><\/figure><\/div>\n\n\n