Sasol yesterday reinstated a dividend to shareholders, after putting it on ice for the past two years, as its annual earnings surged boosted by high global commodity prices.
In its financial results for the year ended June 30, 2022, the chemicals and energy group said shareholders would receive an R9.34 billion dividend, R14.70 per share, which is also the highest dividend per share the group has paid.
Headline earnings per share increased by 20 percent to R47.58 per share compared to the prior year. Earnings before interest and tax of R61.4bn grew from R16.62bn in the prior year.
Sasol said this was offset by lower volume performance mainly due to the operational challenges experienced in the first half of the financial year. But it said the performance had since improved as operations stabilised in the second half of the financial year.
Chief executive Fleetwood Grobler said: “The financial year 2022 was characterised by a number of factors impacting our business, including geopolitical tensions, further Covid-19 lockdowns in China, weather-related events, and global supply chain disruptions.”
“Our financial performance benefited from higher Brent crude oil and stronger fuels and chemical prices, as well as a recovery in demand across our portfolio post the Covid-19 related impacts, together with disciplined cost and capital spend,” he said.
Its Secunda operations production volumes decreased by 10 percent to R6.9 million tonnes.
Coal export sales fell by 12 percent, due to operational challenges in South Africa’s Transnet rail and port network.
Sales volumes in the group’s chemicals Africa business fell by 12 percent due to operational challenges, but profits more than doubled given rising prices and accounting remeasurements.
Looking ahead, Sasol guided between 7 million and 7.2 million tonnes from Secunda in 2023, saying it had beefed up its coal stockpile, while it expects to sell between 53 million and 56 million barrels of liquid fuel, having sold 55.2 million in 2022.
On gas prices, Grobler said Sasol had been engaged with the National Energy Regulator of South Africa (Nersa) to finalise the gas price.
“We have been engaged with Nersa since the first quarter of this year to finalise within the framework of maximum gas pricing mechanism to come through on a price that would be realistic in today’s environment, given that the gas price would have been 270 per kilojoule, but we did not think that it was realistic.
“We have proposed a different price level, and at this point, we haven’t finalised with Nersa... in the end they have to assess is the rationality test for a realistic price and that once we’ve agreed, we will take that forward to our customers,” he said.
Sanlam Private Wealth investment analyst Christiaan Bothma said despite a few operational setbacks, the company delivered a solid set of financial numbers on the back of very strong commodity prices.
“They also made good progress on their cost savings initiatives; exceeding targets set a year ago. Whilst longer-term climate risks need to be taken into account, we think the current market price still has more than discounts for these issues and we expect the business to continue to outperform given the tight prevailing energy markets,” he said.
Bothma said the bulk of the increase in profits could be attributed to stronger oil and chemical prices, but the cost performance was also pleasing with the company exceeding its cost savings targets set a year ago.
“This was achieved despite a few operational setbacks – most notably the issues reported on last December at its coal mines,” he said.
BUSINESS REPORT