Eskom's profit doubled by March 31, 2026, reaching a net profit after tax of R30.3 billion, compared to R14 billion the previous year. This marks the second consecutive annual profit for the utility after eight years of losses.
Revenue increased by 4.1% to R354.7 billion, and earnings before interest, taxes, depreciation, and amortization grew by 10.9% to R108.6 billion. Meanwhile, net debt decreased by R45.3 billion to R313.3 billion. Accumulated losses reduced from R40.9 billion to R12.1 billion. Eskom Holdings itself, excluding the transmission subsidiary, shifted from a loss of R14.3 billion to a profit of R14.1 billion.
However, much of this growth is not linked to an increase in electricity sales. Sales fell to 178 TWh from 189.7 TWh, representing a 6.2% decrease over one year. Eskom attributes this to reduced production at metallurgical plants, unplanned shutdowns, and the closure of mining shafts in the mining industry, as well as weaker demand recovery and, according to the company, 'solar installations in many sectors.'
Operating profit was achieved due to a 12.74% increase in the average tariff, approved by the energy regulator Nersa during this period, as well as lower primary energy costs amid improved generation performance. The energy availability factor rose to 65.16% from 60.6%, although it still has not reached the target of 70%.
Search for new demand
The remaining profit came from lower levels of the financial statements. Eskom links the improvement in profit before tax mainly to a reduction in net financial expenses and smaller losses on financial instruments. Net fair value and currency fluctuations cost the utility R10.4 billion in 2025, but only R1.1 billion in the current year, a decrease of R9.3 billion and accounting for more than half of the R17.5 billion improvement in profit before tax. Depreciation increased by R4.6 billion, partially offsetting this increase.
The combination of higher prices and fewer units is a trend that other utilities find difficult to overcome. Chairman of the Board, Mteto Nyati, acknowledged this limitation during the results presentation on Monday, telling the audience that 'raising tariffs alone is not a strategy' and that they cannot bear the burden of municipal debt, declining sales, aging fleet, and capital needed for the energy transition.
Eskom is seeking new demand. The company agreed on preferential pricing of 62 cents/kWh with the metallurgical plants Samancor Chrome and Glencore-Merafe ferrochrome, and also concluded a separate two-year deal with Manganese Metal Company. It is expanding transport schemes and preparing for potential growth in electricity demand from the data center sector.
Total municipal arrears debt increased by R17 billion, or 17.9%, reaching R111.6 billion. During the year, Eskom wrote off R3.6 billion and will write off another R4 billion in 2027 in accordance with the national treasury's directive to 21 municipalities under the municipal debt relief program.
The city of Johannesburg breached the terms of its payment plan on April 13, making its entire debt immediately payable. Eskom sent an official notice on May 19 regarding its intention to reduce, interrupt, or cease electricity supply to certain points of centralized supply in Johannesburg and City Power. The city fully repaid the debt on August 21, and Eskom withdrew the process.
The financial statements describe municipal arrears debt as a key issue that must be resolved before the legal separation of the distribution business. Deloitte issued a qualified opinion for the year. Auditors found that Eskom had not fully reflected irregular expenses as required by the Public Finance Management Act, due to inadequate internal controls for detecting and recording such expenses, as well as for assessing potential irregular expenses arising from non-compliant supply chains.
Irregular expenses are disclosed at R4.9 billion for the group, compared to revised R10.9 billion, but Deloitte stated that it 'could not determine the full extent of the distortion' because it was impractical. The materiality threshold for the group for audit purposes was set at R2 billion. The reporting also contains significant uncertainty related to ongoing operations. The board concluded that Eskom could continue its operations but noted inadequate tariffs, declining sales volumes, high debt servicing costs, growing municipal debt, rising costs above inflation, and the impact of crime, fraud, and corruption, including revenue losses from illegal connections and illicit prepaid tokens.
After the financial year
The Minister of Finance approved the conversion of Eskom's shareholder loan of R80 billion into equity capital on August 9. Equity capital has already grown by R64 billion during the year, reaching R381.6 billion. Guarantee fees of R980 million for 2025 and R984 million for 2026 were postponed to March 2027, and R329 billion in government guarantees remain in force.
The ES26 bond worth R38 billion matured and was redeemed on April 2. Fitch upgraded Eskom's local currency rating to B+ in June, and Moody's confirmed its ratings in May, both with a stable outlook. President Cyril Ramaphosa supported the first report of the restructuring working group on July 31, confirming that the independent transmission operator would own the power grid. The statements outlined temporary measures proposed to ensure the independence of the National Transmission Company of South Africa currently: absence of common directors between the boards of Eskom and NTCSA, appointment of its own CEO and senior management for NTCSA, financial and operational autonomy, cancellation of the overarching guarantee issued by NTCSA to Eskom's creditors, and information barriers for commercially sensitive information.
Eskom states that it cannot yet assess the full impact of the restructuring on its financial statements. The utility and Business Leadership South Africa issued a joint statement on Monday, announcing a consensus on the reform program after public disagreement in July regarding how transmission assets should be separated.
Nyati's three-year term as chairman ends at the end of October. Neither he nor the shareholders have announced whether he will serve another term.
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