North America key to future

Sasol results for the half year hit the screens this morning. This is a record half year, juiced up by the weaker Rand and steady oil prices. It is both a giant of the South African corporate landscape, because of the well known brand association (and excellence!) but equally at the same time as a global company a mid tier operator. A giant in the small pond and medium fry in the ocean. Sasol is one quarter of the market cap of BP plc, that is not small fry, which is why I classify it as medium fry, that is fair.


At this size and scale in terms of synthetic fuels, Sasol has few, if any peers. And since 1955, the coal to liquids plant in Sasolburg has been providing consumers with synthetic fuel, this business turns 60 next year. Secunda and Sasolburg exist as stand alone towns as a result of this one company. Most mining towns are spawned as a result of many different companies operating around towns like Welkom (a shadow of its former past) and cities like Johannesburg.


Inside of the South African mining cluster (i.e. the local original businesses) Sasol Synfuels remains hugely profitable and the core of the business. Still. Headline earnings up a whopping 26 percent off the record base in the prior period, 30.19 ZAR in EPS, with a record 8 ZAR per share interim dividend, that is an increase of 40 percent. Not bad said someone on the box this morning for a business that listed at 1.75 ZAR in 1979. 1979 of course is a long, long time ago. In the case of energy companies almost anything can happen over 35 years. Most companies actually, 35 years is a lifetime.


Talking of companies changing (this one has a nearly 64 year history), Sasol have invested 5.1 billion Rand (as of the full year last year) in low-carbon electricity generation, leading me to believe that this could potentially be the company to solve the state operators (current) woes. Let Sasol help the private sector with electricity, let the government with the NDP and developmental state help electrify the rest of the country. Just a thought. I think thats the future of the business.


I will hand over the results segment and some more unpacking of the interim numbers to Michael, he wrote extensively about the trading update three weeks ago: Sasol's two extremes. Here goes, Michael's musings, extra views on Sasol