Hudaco Industries has discontinued two businesses in its portfolio — the alternative energy business and the battery bay management and battery service business within Eternity Technologies.
The group, which imports automotive, industrial and electrical products, said in a statement the businesses will be classified as discontinued operations in its results for the six months to end-May.
Hudaco had previously communicated the businesses were underperforming and their futures were under consideration.
Its alternative energy business, which distributes solar and back-up power products, thrived when there was frequent load-shedding. It was initially known as Hudaco Energy and later incorporated into Deltec Energy Solutions.
Though demand fell away when load-shedding ceased, management believed the business could succeed in the alternative energy sector by providing environmentally friendly solutions and solutions aimed at reducing energy costs for commercial, industrial and residential applications in the face of ever-increasing electricity tariffs.
“However, that market has become commoditised, with low margins and rapidly falling product costs putting pressure on selling prices. This ‘stack it high and sell it cheap’ approach is not aligned with the Hudaco strategy of high-margin value-added distribution and, accordingly, is being discontinued,” the group said.
Impairment of inventory that was paid for two to three years ago, amounting to R125m, has been recognised and limited retrenchment costs have been incurred.
While reasonable effort will be made to extract some value from the inventory, which will be difficult in the prevailing market, no further procurement is envisaged, it said.
Hudaco will continue supplying automotive batteries through Deltec and UPS products through Specialised Battery Systems.
Its battery bay management and battery service business within Eternity Technologies supplies traction batteries and services, primarily for forklifts. The contract-based, labour-intensive business was running at a low margin due to above-inflation increases in labour costs over an extended period.
In the past, product sales to customers more than compensated for the poor margin.
“As communicated in the integrated report released in February 2026, the entry into the market of former staff members with a key supplier supporting them by splitting the agency has put product margins under further pressure and this labour-intensive business is no longer viable,” it said.
Eternity Technologies will continue distributing forklift batteries and accessories but has terminated all management and service contracts with customers. It is in the process of retrenching about 90% of the 245 Eternity Technologies employees.
The abandonment of this business involves retrenchment costs, impairment of plant and inventory write-offs totalling R21m, it said.
As a result of the impact of the discontinuance of the two operations and the fact that a gain of R35m in the previous year on the fair value adjustment of a liability to a vendor of a business it had acquired was not repeated in the current year, the group expects its headline earnings to be lower.
HEPS for the first half are expected to be between 624c and 635c, 32%-34% lower than a year ago.
Its comparable EPS, which excludes discontinued operations and fair value adjustments on vendor liabilities, will be 12%-13% higher.
The group will release its interim results on July 3.
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