Profit puts cheer on Sasol’s stock
Sasol rose to the highest in five years after the biggest coal-toliquid fuel producer said profit rose as much as 30 percent, boosted by higher-thananticipated output from its synthetic fuels unit. Headline earnings a share rose by between 20 percent and 30 percent in the 12 months to June, it said yesterday, for headline earnings a share of as much as R54.96 compared with R42.28 a year earlier. The stock rallied 3.8 percent to close at R472. – Bloomberg SIGNS of a recovery in South Africa’s export fortunes emerged in recent trade data from the SA Revenue Service (Sars). Sales to major trading partners rebounded in the first half of the year after slow growth or no growth last year.
According to Sars, the value of goods sold to China rose 21 percent to R52.3 billion between January and June, compared with the same period last year. This compares with last year’s first-half growth of only 5.6 percent. And exports to Germany and Japan increased by 20 percent and 24 percent, respectively, in the first half after shrinking substantially in the first half of last year.
While the weaker rand assisted export growth, the benefits were neutralised because the depreciation also boosted the import bill.
Imports rose faster than exports, creating a cumulative deficit of R75.9bn compared with R51.6bn in the six months to June last year. Comparisons all refer to first-half figures.
South Africa’s overall trade deficit owes much to its ambitious infrastructure programme, which relies heavily on imported capital goods.
Total imports of machinery and appliances were worth a massive R112bn in the first six months. Of this, R32.4bn was sourced from China, R13.8bn from Germany, R10.1bn from the US, R4.9bn from Japan and R3.7bn from the UK. South Africa also bought R6.4bn of “original equipment” components from Japan.
South Africa’s appetite for capital goods explains why the country ran a large trade deficit with two of these countries. The shortfall with Germany rose to R31.2bn from R21.9bn. The largest economy in the euro zone sold South Africa R51bn worth of goods and bought less than R20bn from South Africa this year.
A yawning gap also emerged in trade with China – R17bn up from R10bn. South Africa exported R52.3bn worth of mostly commodities to the world’s second-biggest economy and imported goods valued at R69.3bn.
South Africa’s major export to the rest of the world was the category mineral products, valued at R103.3bn. Simultaneously the country spent R107.5bn buying mineral products from other counties.
Willemien Viljoen, a researcher at the Trade Law Centre, said the exports and imports in this category were largely of different products.
Referring to imports, she identified crude oil, light oils and preparations, and coke and semi-coke of coal and lignite. Exports, she said, consisted largely of bituminous coal, most commonly used in power generation, agglomerated iron ores, non-agglomerated iron ores and chromium and magnesium ores. Much of the trade in mineral products is with the Netherlands, from which South Africa sources large quantities of light oils and preparations. Mineral products exported to the Netherlands, Viljoen said, were mainly agglomerated iron ores, bituminous coal and titanium ores.
Among the major trading partners, the Netherlands emerged as South Africa’s fastest-growing export market in the first half of the year, up 37 percent to R15.5bn, while imports were worth only R7.8bn, leaving a trade surplus of R7.7bn. Mineral products were also by far the biggest export to China – R41.6bn.
But the relatively strong performance, so far this year, could taper off in line with loss of economic momentum. Nomura International, which forecasts growth in China’s gross domestic product of only 6.9 percent next year from 7.5 percent this year, noted that South Africa was one of the countries most exposed to the consequent slowing in China’s commodity demand.
“South Africa stands out by quite a way given a mixture of processed and unprocessed commodities exports. While export exposure to China had been occurring for a long time, the main spurt seems to have come in the second half of 2010, thanks most likely to China’s investment boom which took off during that period.”
The growth outlook for the US and Germany is improving.
This year the biggest export to the US has been R10bn worth of the category made up largely of vehicles. The biggest sale to Germany was R4.6bn in precious metals and stones, followed by R4.6bn in machinery and equipment and R4.5bn worth of cars.
The main export to Japan was R11.4bn in precious metals and stones followed by R4.3bn in mineral products. The UK bought largely precious metals and stones – R4.9bn.
Business Watch, page 18