Sasol’s share price has surged nearly 60% since its capital markets day, where the petrochemical group set out a three-year growth plan focused on cutting costs and reducing debt to restore its capacity to resume dividend payments.
The group, which is marking its 75th year of existence in May, held its capital markets day under the leadership of group CEO Simon Baloyi for the first time.
The new strategy is anchored on strengthening and growing the group, which is an anchor company in SA’s economy and indispensable to a town like Sasolburg.
Investors have liked Sasol’s turnaround plan, which includes upping its production of fuel from coal while simultaneously expanding its green energy business.
Sasol has slashed the budget for its greenhouse gas emission reduction road map (ERR) by 70% and now plans to spend no more than R7bn on the initiative. It believes it will still be able to reduce its global greenhouse gas emission footprint by 30% come 2030.
The company, which has had a torrid past few years, has also had good fortune along the way since it outlined its growth blueprint.
Six days after the capital markets day, Transnet opted to settle its long-running legal dispute over pipeline tariffs with Sasol. The settlement saw Sasol pocket nearly R5bn, almost all the budget it needs to fund its recently revised downwards ERR — a key cog in its growth strategy.
Sasol’s share price also benefited from President Donald Trump’s new sanctions on Russia’s two biggest oil producers, Rosneft and Lukoil, last month.
The group will on Friday host its AGM, where its climate commitment is again expected to be a hotly debated matter.
Just Share has already said that there are “glaring” gaps in Sasol’s decarbonisation plans and that investors cannot properly assess how Sasol will implement the ERR in a way that ensures credible real-world emission reductions.
“Given the credible risk of non-delivery by the company on the commitments in the optimised ERR, and to ensure well-informed investment decisions, it is important for shareholders and other stakeholders to have full details of Sasol’s plans to ensure it can meet its decarbonisation targets,” Just Share said.
“It is also essential for shareholders and policymakers to better understand the broader impacts of the company and the risks these pose to the economy and society.”
For the financial year to end-June, Sasol reported adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of R51.8bn, down 14% from the previous year, while turnover fell 9% to R249bn. Headline earnings per share rose 93% to R35.13.
Total impairments eased sharply to R20.7bn from R74.9bn the previous year, with R13bn linked to the Secunda and Sasolburg liquid fuel refinery units, which remain fully impaired.
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