Johannesburg - Sasol planned to make savings of at least R3 billion a year over the next three years in a bid to control costs, the listed petrochemical giant said yesterday.
Speaking at a presentation of financial results for the year to June, David Constable, the chief executive, said the figure was conservative and was the beginning of further savings.
Asked whether the plan would result in job cuts, he said it was too early to confirm the impact on the workforce. “It’s a little premature to talk about how it will affect employees. Whatever happens we will take appropriate steps and engage with the relevant stakeholders.”
Further details would be announced in March next year.
Rising costs are Sasol’s major concern, with labour comprising 60 percent of all expenses. “We have a lot of challenges, but costs is our number one challenge. We cannot continue to increase costs above inflation (of) up to 5 percent a year. We have taken proactive steps.”
In the year to June, the chemicals cluster was under pressure and the polymers division recorded an operating loss of R2.8 billion compared with an operating profit of R716 million in the prior year.
Production at its synthetic fuels business and a 20 percent rise in crude oil prices this year boosted profits. The operating profit at its synfuels division increased 30 percent to R28.6bn and earnings at its South African energy cluster unit increased 28 percent to R37bn.
Sasol posted a 26 percent increase in operating profit to R40.6bn, which was negatively affected by net one-off charges of R8.5bn relating to, among others, the partial impairment of Arya Sasol Polymer Company in Iran and the FT wax project.
The write-off of an exploration well in Mozambique, amounting to R422m, also had a negative impact.
Headline earnings a share improved 25 percent to R52.62 and earnings a share increased by 11 percent to R43.38 over the same period.
The company approved a total dividend of R19 a share, 9 percent higher than in the previous year.
“We continue to deliver value to shareholders despite the negative impact on our profitability of one-off charges, mainly impairments,” said Christine Ramon, the outgoing chief financial officer.
Paul Victor will be acting chief financial officer.
Sasol’s chairwoman of seven years, Hixonia Nyasulu, announced her resignation yesterday and is expected to step down at the annual general meeting on November 22. Mandla Gantsho has been appointed as her replacement.
Sasol has reduced its shareholding in the Uzbekistan gas to liquid project from 44.5 percent to 25.5 percent at the end of the front-end engineering and design phase. It has disinvested from Iran after selling its share in Arya Sasol Polymer Company last month.
The share price dropped by 0.10 percent to close at R489.05 on the JSE yesterday. - Business Report