Ellies returns to profit as alternative energy sales rise

Electronics group Ellies returned to profitability during the six months to end-October, due to improvements in the way it handles its logistics, as well as reduced loss at its embattled manufacturing division.

Revenue for the company, which makes and trades products ranging from satellite dishes to shelving, increased by 1.9% to R656.7m. 

The group said while the growth in the SA economy remained subdued and was influenced by the economic effects of the Covid-19 pandemic, the difficulties experienced at Eskom contributed positively to its results through the sale of alternative energy solutions.

Earnings before interest, tax, depreciation and amortisation (ebitda) for the reporting period soared 1,261.3% to R33.4m from R2.5m previously. 

Headline earnings per share (HEPS), which strips out the effects of once-off financial events, jumped 181.6% to a profit of 2.37c, compared to a loss of 2.91c in the six months to end-October 2019. 

Ellies said it had seen improved revenues and profit margins, as well as a substantial reduction in operating expenses, due to it paring off its warehousing and logistics operations to a third-party provider.

The group said in its annual report for 2020 that restructuring its logistics business allowed for the centralisation of operations, as well as just-in-time delivery to customers.

The main drivers of operating expenses remain employment costs and logistics expenses, said the group. 

No dividends were declared for the period. 

In lunch time trade, Ellies stock — which tends to be volatile — was trading 9% lower at 10c, giving the group a R68m market capitalisation. 

With Karl Gernetzky

gavazam@businesslive.co.za