JSE-listed Blue Label on Wednesday posted a decline in core headline earnings per share (HEPS) from 121.01c apiece in 2022 to 45.55c a share in the 2023 financial year.

While consistent growth was seen in Blue Label’s core businesses in terms of revenue, gross profit and core HEPS for the year under review, 45%-owned Cell C continues to weigh on its financial performance.

However, separating Cell C from Blue Label, shows that its core businesses continue to perform, says joint-CEO Brett Levy.

With Cell C working to rebuild confidence, and improve its network, liquidity and customer value proposition, a lot of work still needs to be done, but Levy is confident that the results will start showing in the next 12 to 18 months.

Excluding the extraneous contributions of R523-million, mostly owing to the recapitalisation transaction of Cell C, which was successfully concluded in September 2022, and the non-recurring income of R214-million in the prior year, core HEPS increased 9% to 104.83c a share, compared with 96.56c a share in the prior year.

Core headline earnings for the year ended May 31 amounted to R402-million in 2023, down from R1.061-billion in the comparative period last year; however, excluding the extraneous contributions, core headline earnings increased 9% from R847-million to R925-million.

Earnings per share (EPS) and HEPS amounted to 30.48 c and 41.97c, but excluding extraneous contributions and non-recurring income from both the current and prior years, EPS increased 8% to 100.35c and HEPS 9% to 101.24c apiece.

Group revenue increased 6% to R18.9-billion. Including the gross amount generated on PINless top-ups, prepaid electricity, ticketing and gaming, the effective increase equated to 6% from R72.3-billion to R76.8-billion in the year ended May 31, 2023.

Gross profit increased 19% from R2.931-billion to R3.483-billion, corresponding to an increase in margins from 16.46% to 18.41%, partly attributed to the growth in PINless top-ups, prepaid electricity, ticketing and gaming, where only the gross profit earned thereon is recognised as revenue.

The group further highlights that loadshedding is negatively impacting the sale of prepaid electricity, prepaid airtime, starter packs and call centre operations, all of which are significant revenue streams for the group.

During the period from June 2022 to the end of May 2023, there were 305 days of some form of loadshedding, equating to 32 full days without power, heavily impacting merchants, who could not trade.

“The frequent power outages imposed by external factors have adversely affected our operational efficiency, resulting in disruptions, delays and additional costs.

“While the management team has worked diligently to mitigate the effects of loadshedding, it has disrupted the availability and accessibility of these essential services to our customers and has negatively affected our overall financial performance,” the company’s financial results outlined, noting a decline in demand for these product offerings, resulting in a significant reduction in revenue.

The unpredictability and intermittent nature of loadshedding have made it challenging for customers to conveniently purchase these products, especially during the second half of the financial year when the country experienced stage 4, and increased levels of, loadshedding.