The To­tal pic­ture

Finweek English Edition - - Companies & Markets - MARC HASENFUSS

IN­VESTORS IN EN­ERGY gi­ant Sa­sol don’t have many points of com­par­i­son on the JSE to mea­sure per­for­mance. Ever since the delist­ing of En­gen and En­ergy Africa there’s re­ally been no com­par­a­tive coun­ter­mate for Sa­sol (no dis­re­spect in­tended to illiq­uid Nige­rian oil com­pany Oanda).

How­ever, Rem­gro’s latest an­nual re­port does pro­vide some key in­sight into the per­for­mance of South Africa’s oil in­dus­try via its 24,9% in­vest­ment in To­tal South Africa. In­ter­est­ingly, Rem­gro re­veals that To­tal’s con­tri­bu­tion (for the year to end-De­cem­ber 2007) to group prof­its was down markedly at R207m from R246m pre­vi­ously – which is some­what sur­pris­ing con­sid­er­ing the firm crude price over that pe­riod.

Rem­gro dis­closed that To­tal’s SA mar­ket share for main fu­els re­duced slightly dur­ing the year to De­cem­ber 2007 but that sales vol­umes and gross prof­its had in­creased 5%. The rea­son prof­its stum­bled at To­tal was due to a 10% drop in re­fin­ing gross prof­its in Na­tref (in which To­tal has a 36% in­ter­est) – mainly due to the stronger rand against the US dol­lar.

Na­tref was also shut down for six weeks from May 2007 for planned main­te­nance and that was also fol­lowed by a num­ber of un­planned shut­downs. Rem­gro says the re­duced gross profit con­tri­bu­tion from re­fin­ing was com­pen­sated for by an in­creased mar­ket­ing mar­gin.

De­spite the slightly un­der­whelm­ing per­for­mance from To­tal, Rem­gro marked up its in­vest­ment in the oil group to R2,6bn (last year: R2,2bn). That would give To­tal an en­ter­prise value of roughly R10,5bn. As such To­tal re­mains one of Rem­gro’s smaller in­vest­ments – slightly big­ger than Transvaal Sugar (which has its own en­ergy joint ven­ture un­der way) and roughly a third of the size of Rem­gro’s 4,4% hold­ing in Im­pala Plat­inum.

Rem­gro may now have held a far big­ger en­ergy sec­tor ex­po­sure if it had held on to its stake in En­gen. Rem­gro was one of the ma­jor share­hold­ers that fa­cil­i­tated the sale of En­gen to Malaysian oil gi­ant Petronas in the late Nineties.

How­ever, the higher crude price and slightly weaker US dol­lar/rand ex­change rate could make To­tal SA a much big­ger fac­tor in Rem­gro’s for­tunes in the year ahead.

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