JSE-listed retailer Spar said South Africa experienced unprecedented levels of electricity loadshedding which directly is impacting trading performance and profitability of its retailers.
Higher levels of loadshedding are expected to impact retailer profitability due to the additional energy costs associated with back-up solutions required during loadshedding hours, said the retailer.
“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,” said Spar.
Spar estimates the added cost of diesel incurred by its retailers required to run generators during the six months to end March 2023, amounted to more than R700 million.
“The Spar retailers have access to funding for generators, batteries and other machinery through the SPAR Guild development fund and other Spar arranged funding.”
The retailer said 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 full impact of loadshedding.”
During the six months to end-March, Spar’s costs for diesel, to run generators, has more than tripled when measured against the prior comparative period, albeit nowhere near the costs borne at retail.
“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.”
