Company news in brief

Eskom to spend millions on severance packages

South Africa's Eskom has offered some managers voluntary severance packages, capping costs at R400 million, a communique sent to staff by the struggling state power utility showed.

Eskom does not generate enough cash to cover its mammoth debt servicing costs and expects to make a loss of around R20 billion this financial year.

The severance packages are open to managerial employees in non-core positions as well as managers from 60 to 62 years old.

Eskom said in a statement that it would recoup the cost of the severance packages through savings within a year.

Analysts have long said that Eskom should cut its bloated workforce of more than 46 000 staff.

Eskom also offered voluntary severance packages in 2015. – Nampa/Reuters

Comair expects first half loss

South African airline Comair expects a half-yearly loss, hit by the grounding of Boeing's 737 MAX planes, while compensation talks with the US planemaker are underway.

Comair said it expects headline earnings per share (HEPS) to fall more than 170% for six months ended Dec. 31, which will result in a loss. It reported half-yearly HEPS of 27.2 cents a year earlier.

"No accrual for compensation from Boeing has been raised to date, however, negotiations are underway," said Comair, which operates flights in southern Africa under a licence from British Airways.

Comair, which settled a dispute with South African Airways (SAA) last year, also said that SAA was in breach of an agreement after failing to make payment in December and now owes an amount of R790 million.

Last February, South Africa's competition body ordered SAA to pay Comair R1.1 billion in a dispute that dates back more than a decade involving SAA's travel agent incentive schemes. – Nampa/Reuters

Indebted Tongaat in talks to sell business

South Africa's heavily indebted sugar producer Tongaat Hulett Ltd has entered negotiations on the potential sale of Tongaat Hulett Starch, it said on Thursday, without providing details on the talks.

The agriculture and agri-processing company is seeking to cut debts through selling assets, cutting jobs, raising equity and other measures aimed at boosting cash flow.

Tongaat said in January it had already met its first debt reduction milestone of R500 million as defined in its refinancing agreements with funders and assets disposal assessments were at an advanced stage.

Tongaat Hulett Starch is Africa's largest producer of starch, glucose and related products, according to Tongaat's website. Its five mills make ingredients for alcoholic drinks, baking, jams, canned food and other products.

In the six-months ended Sept.30, the starch and glucose operations reported a flat operating profit of R306 million and grew sales volumes by 4.5% to 254 000 tonnes, benefiting from increased demand in the alcoholic beverages sector and continuing growth in the coffee creamer sector. – Nampa/Reuters

SA Express under bankruptcy protection

South African state airline SA Express is under a form of bankruptcy protection known as business rescue, a spokeswoman for the airline said.

Her comments come after SA Express lost a court battle with a contractor, logistics firm Ziegler, earlier this month.

SA Express, which flies to domestic and regional destinations, is a separate business from much larger state carrier South African Airways (SAA), which entered business rescue in December.

On Feb. 6, a South African court ordered that SA Express be placed in business rescue after Ziegler argued that the airline was unable to pay its debts.

SA Express said at the time that it would appeal the court order. It was not clear whether SA Express had decided against lodging the appeal and SA Express spokeswoman Mpho Majatladi declined to elaborate. – Nampa/Reuters

PepsiCo's outlook disappoints

PepsiCo Inc reported quarterly revenue and earnings ahead of market expectations, driven by demand for its healthy snacks, trademark sodas and Gatorade energy drinks, but its conservative 2020 outlook sent shares lower.

The soft drink and snack maker forecast earnings per share would rise 6% in 2020, less than Wall Street had expected and predicted slower organic revenue growth than last year.

For 2020, PepsiCo forecast core earnings of US$5.88 per share, below US$5.95 expected by analysts, according to IBES data from Refinitiv. It sees organic revenue up 4% this year after a 4.5% rise in 2019.

Net revenue rose 5.7% to US$20.64 billion in the fourth quarter, beating the estimate of US$20.27 billion. It earned US$1.45 per share on an adjusted basis, a cent above market forecasts. – Nampa/Reuters