Electronics group Ellies swung to a headline loss over the past year, partly because the number of satellite dishes it installed fell and more people started streaming television as fibre connectivity increased.
This resulted in headline earnings per share (HEPS) falling 177.6% in 2022 from 9.19c to a headline loss per share of 7.13c, amounting to a total loss of R52.3m for the year ended April.
Ellies — which imports, makes and sells electronic equipment such as aerials and power trolleys, as well as doing solar installations — was one winner of the early days of the pandemic, because MultiChoice was classified as an essential service and it partnered with Ellies to continue delivering services while people were homebound.
Many installed satellite dishes to watch DStv when they were at home, but the pandemic also led to more consumers getting fibre internet connections, offering them access to entertainment alternatives such as Showmax, Netflix and Disney+.
As lockdowns eased, Ellies’s traditional business of installing satellite dishes started eroding “at a faster rate than in the past, and frankly, faster than we anticipated,” CEO Shaun Prithivirajh said on Friday.
Ongoing Covid-19 lockdowns in China which disrupted the supply chain also hit the satellite installations side of the business, in part because of an intermittent shortage of decoders as the global shortage of microchip sets continued.
Ellies has struggled to maintain profitability over recent years and lost money in its manufacturing business, but is betting on solar power equipment and generator sales to turn its fortunes around.
The recent load-shedding and ongoing problems at Eskom were too late to prop up the latest annual results, but demand for Ellies’ inverter and solar power products has grown since.
The company has also had to endure SA’s weak economy, record unemployment and fuel price hikes eating into consumers’ disposable income as they cut back on luxuries such as satellite TV.
Ellies — which generates the bulk of its revenue in SA followed by Namibia (3.05%), Botswana (1.75%) and Eswatini (less than 1%) — is diversifying its revenue streams away from MultiChoice to solar, smart homes and water infrastructure, but Prithivirajh said this is placing further stress on its constrained working capital. Its revenue fell 10.8% to R1.08bn for the year.
Its share price was unchanged on Friday at 17c giving it a value of R153m.
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