JSE-listed grocer Spar today announced that the unprecedented power cuts had a direct impact on the trading performance and profitability of its retailers.
The retailer said higher power cuts will impact retailers’ profitability due to the additional energy costs associated with the back-up solutions required during the power cuts.
“Our retailers have experienced a significant increase in operating costs, primarily driven by the increased cost of diesel required to run generators during the higher levels of loadshedding, coupled with higher repairs and maintenance costs and product wastage, as generators occasionally fail under extended periods of usage,” the company said.
Spar estimates the additional cost of diesel incurred by its retailers due to running generators in the six months to the endof March at more than R700 million.
Spar retailers have access to finance for generators, batteries and other machinery through the Spar Guild Development Fund and other SPAR arranged finance.
The retailer added that its distribution centres continue to benefit from modern solar energy installations.
“This equipment has assisted in the management of energy costs; however, it is not sufficient to deal with the impact of loadshedding.”
During the period, Spar’s cost of diesel to run generators more than tripled from the previous comparative period, although not nearly as much as the cost incurred by retailers.
“Whilst the Spar retailers carry the majority of the loadshedding-related costs, the wholesale business is impacted by the resulting financial pressure experienced by our retailers.”
Spar increased its revenue by 7,9% to about R72,9 billion in the six months to the endof March 2023.