South African businesses are facing unprecedented challenges due to the relentless power outages sweeping the nation. With the economy slowing down, consumers have less money to spend, resulting in decreased sales for companies.
The financial statements and trading updates of JSE-listed companies reveal the massive amounts spent on diesel and the countless hours lost due to load shedding. Nedbank reported that the economy had only two days without load shedding in the fourth quarter, while Absa predicted that the economy would grow by less than 1% this year.
Eskom, South Africa’s electricity public utility, has implemented load shedding up to stage 6 to protect the national grid from a total blackout. The South African Reserve Bank estimated that the country’s electricity crisis costs the economy up to R899 million daily.
Companies across various sectors are feeling the financial strain. Mobile operator MTN revised its targeted core profit margin guidance for South Africa due to higher-than-expected power costs and network security expenses. Meanwhile, retailer The Foschini Group (TFG) estimated that load shedding reduced its retail turnover by about R1 billion over the 2023 financial period.
Pick n Pay, Shoprite, and Woolworths also reported significant costs associated with load shedding, while private hospital group Netcare faced increased diesel costs. In January, poultry company Astral Foods warned that South Africa’s food safety was compromised due to high feed input costs and devastating levels of load shedding.
The ongoing power crisis in South Africa is severely impacting businesses across the board, forcing some to lower their growth outlooks and raising concerns about the future of the country’s economy.