Eskom is our biggest salesman, says Reunert CEO
ITWeb
Eskom is our biggest salesman, says Reunert CEO By Admire Moyo, ITWeb's news editor.Johannesburg, 29 May 2023 Read time 3min 30sec Comments (0) While South Africa suffers ongoing power shortages, JSE-listed ICT and technology firm Reunert is reaping the rewards of load-shedding. With a market capitalisation of over R10 billion, Reunert is an industrial group with a portfolio of 20 businesses in its electrical engineering, ICT and applied electronics segments. In an interview with ITWeb last week, Reunert group CEO Alan Dickson said embattled power utility Eskom is currently “the company’s biggest salesman”. This, as businesses and households are rapidly deploying renewable energy solutions, as the load-shedding crisis continues. However, while Reunert is cashing in on the huge demand for its renewable energy products, it is also feeling the pinch of the power blackouts. According to Dickson, the past six months have been the toughest, with the company spending “tens of millions of rands” to keep the lights on. The majority of the money was spent on diesel to power generators. In its financial results for the six months ended 31 March, Reunert said the demand for the renewable energy cluster’s products and services accelerated, particularly with the private sector seeking alternate energy sources, including storage (batteries from Blue Nova Energy) and solar PV (from TerraFirma Solutions). “Load-shedding supports our renewable energy business. But this is a terrible situation for the country. It damages business confidence and takes money away that would have otherwise been invested to generate value,” said Dickson. “While we have this short-term renewable energy boost, I think in the long-term, Eskom must be able to solve its problems for the sake of the country and the broader economy.” He pointed out the company is spending a fortune on its power backup solutions to mitigate against the impacts of load-shedding. “We have been dealing with this for more than a decade now. So, we are pretty resilient ourselves in terms of our ability of execute our operations. However, this is particularly expensive,” he said. “That really has been very disappointing. The area where load-shedding has the biggest impact on us is within our business communications cluster in the ICT segment, where when you have load-shedding, customers will not be able to make or receive calls. That impacts our ECN business.” Reunert was one of the local companies impacted by the global semiconductor shortages spurred by the COVID-19 lockdowns that disrupted supply chains. Last year, the group said it suffered from the global electronic chip supply shortages and complex supply chain dynamics. The situation worsened in the second half of 2022 and resulted in a loss of sales and operating profit at its Nanoteq, Omnigo and Nashua subsidiaries. However, Dickson said the situation is improving. “The global chip shortage impacted our circuit breaker business, and we had a severe challenge, both in terms of costs and availability. Now the supply chain has improved, and in addition to that, we’ve redesigned many of our products to do away with those chips that were a challenge. “We find ourselves now in a much better position. We are not yet back at pre-COVID supply chain efficiency on electronic chips, but we are getting there. While this was a material impediment about 18 months ago, we find ourselves in a better position. Across the group, we are seeing improved supply chains.” Dickson also pointed out that the weakening local currency is negatively impacting the business when it comes to imports, but noted these costs are offset by the company’s exports. “We sell all our products outside of South Africa in hard currency. A weakening rand actually benefits us and boosts our margins. Reunert prefers a gently depreciating rand because that is beneficial to the various business segments that we have.”