Sasol’s earnings in the financial year to June before interest, tax, depreciation and amortisation (Ebitda) more than doubled to R75.5-billion, while basic earnings per share were R62.34 compared with R14.57 last year. 

“This is predominantly due to a strong recovery in Brent crude oil and chemical prices, partly offset by hedging losses and lower chemical sales volumes,” the company said. The average rand per barrel price of Brent crude oil rose by 68% for the period under review, while the average chemical sales basket price in dollar terms increased by 39%. 

That enabled Sasol to pay out a dividend of R14.70 per share, its first since 2019, capping a remarkable turnaround for a company that, like its peers, was staring into the abyss in 2020 as oil prices collapsed in the face of the onset of the Covid-19 pandemic.  

And its earnings could have been better were it not for logistical hiccups in South Africa — a recurring theme for domestic commodity producers. 

“We produced lower volumes across most of our business segments compared to the prior year, mainly due to the operational challenges experienced in our South African value chains in the first half of the financial year, as well as the adverse weather events in the KwaZulu-Natal province which resulted in damage to port export infrastructure,” CEO Fleetwood Grobler said in a statement.

Visit Daily Maverick’s home page for more news, analysis and investigations

Another recurring theme is the massive profits that oil and coal companies have reaped over the past year as the prices of the stuff they produce have gone through the roof. Glencore, BP and Shell, among others, have all coined it. Vladimir Putin’s invasion of Ukraine has helped, which is hardly their fault but will raise eyebrows about their profits.  

Having said that, slowing global growth has cooled the oil rally of late, and is Sasol in a position to withstand another downturn?  

Sasol CFO Hanre Rossouw. (Photo: Supplied)

CFO Hanre Rossouw told Business Maverick that the group’s balance sheet — with debt slashed from more than $10-billion last year to $3.8-billion — would allow it to navigate any coming storm.  

“That was a critical aspect for preparing for any downturn. There are some fears out there that we are facing another global recession and our balance sheet is in rude health. It’s recession-ready,” he said. The company, he said, also remained focused on reducing its cash costs and reiterated that it was striving to be “economically viable” even at $45 a barrel.  

Sharply rising oil prices have also been a bane to South African consumers — they are among the drivers of Wednesday’s planned stayaway and cost-of-living protests — and Sasol has its own “Bain”, which has raised questions about the company’s governance model.  

Global consultancy Bain & Co — which has been blacklisted by the UK government for its role in South Africa’s sordid State Capture saga — counts Sasol among its clients. There have been calls for Sasol to sever its ties with Bain, including from whistle-blower Athol Williams.  

Rossouw noted that the company had suspended Bain from rendering services from 2018 to 2020 — a point that has not been widely reported — in the wake of the Nugent report and subsequently the Zondo Commission, and said Sasol was reviewing the matter again. Given the pressure and risk to its reputation, it seems that the writing is on the wall.  

As Africa’s biggest private sector emitter of the greenhouse gas emissions linked to climate change, Sasol is also under scrutiny to reduce its massive carbon footprint. It has plans to decarbonise by 2050. By that time, its business model will presumably no longer be linked to oil prices. DM/BM