Sasol said on Friday that across the world, the past year was one of significant volatility as the company was hit with lower overall production, which impacted profitability for the year.
In its integrated report released on Friday, Sasol chairman Sipho Nkosi said apart from the devastating humanitarian toll, the Russia/Ukraine war had contributed to stubborn inflation and high-interest rates, subdued economic growth, and disruption to the energy ecosystem and the pace and scale of the energy transition.
“There is no doubt that the challenge of our time is to reshape the sector while maintaining the supply of affordable and sustainable energy to meet the needs of people while safeguarding the planet from environmental degradation.
“In addition to the impact of global developments on South Africa’s economy, its weak performance was exacerbated by intensifying power shortages, deteriorating logistics, and political and socio-economic upheaval.”
Nkosi said Sasol was not immune to the impact of these challenges, many of which informed the material matters for its integrated reporting which were identified and approved in the year.
“Sasol faced several operational challenges related to poor coal quality from our mines and the operational under-performance of our facilities. These contributed to lower overall production, which impacted profitability for the year. Plans are in place to address these challenges,” he said.
According to Nkosi, investor sentiment towards South Africa worsened, hit by the country’s recent greylisting by the Financial Action Task Force, the global intergovernmental body enabling the combating of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction.
“Investor sentiment was also affected by questions on the efficacy and prudence of South Africa’s non-aligned stance on the Russia/Ukraine war. These factors accelerated capital outflows and put at risk a significant portion of export revenue from trading partners as a response to the decisions by the South African government,” he said.
Sasol president and CEO Fleetwood Grobler said the group's financial results for the year were reflective of various mixed factors.
“We continue to face macro challenges with headwinds on demand and pricing, particularly in chemicals alongside persistent inflation with elevated feedstock and energy costs.
“We are also encountering specific challenges in our operating environment, notably in South Africa where we have been impacted by the performance of state-owned enterprises.”
However, he said the group had benefited from an elevated oil price and a weaker rand/dollar exchange rate and it had seen real progress in the mitigating actions that it had taken in many of the areas within its control.
“This is driving better performance in important areas like the mining business, more resilience with the ability to reset to more aggressive targets on Sasol 2.0 following recent out performance, and progress towards the longer-term goals of Future Sasol,” he said.
Looking ahead, Nkosi said: “As we look ahead to Sasol’s new financial year, there is no doubt that the world and South Africa face significant headwinds.
“Now is the time for us all to collaborate: to roll up our sleeves, deliver on our plans, and contribute meaningfully. We will achieve our commitments with the right people and by leveraging partnerships,” he said.
Sasol chief financial officer Hanre Rossouw said, “Given the impact of the external operating environment, we need to intensify our efforts to remain resilient, profitable and cash generative.”
Sasol had, therefore reset its targets for financial year 24 and 25, by increasing its targets for cash fixed cost and gross margin improvement by more than 20%. This amounted to an additional R4 billion in annual Ebitda enhancements by financial year 2025.
BUSINESS REPORT