Financial Mail - Investors Monthly - - Opening Bell - Shaun Harris

Share price: R432,25 JSE code: SOL

SELL THIS IS A BIG GROUP WITH BIG num­bers and pi­o­neer­ing tech­nol­ogy. But the past year has not been easy for it, mainly be­cause of the plung­ing price of oil. That’s re­flected in the share price, which has lost nearly a third of its value.

Oper­a­tions look okay, ac­cord­ing to a lengthy trad­ing state­ment with as many rep­e­ti­tions as DStv. The drop in the oil price, to which Sa­sol’s rev­enue is linked, saved it around $4,2bn as an off­set. Sa­sol says it in­creased liq­uid fuel sales vol­umes by 5% to a record 61,5m bar­rels, while base chem­i­cals climbed 2% and per­for­mance chem­i­cals 3%.

Nev­er­the­less, the trad­ing state­ment, for the year to end June, in­di­cates that the num­bers are go­ing to be bad. Heps, for in­stance, is ex­pected to de­crease by 14% to 19%. Sa­sol of­fers a litany of rea­sons for this, and a longer list of fac­tors sup­port­ing prof­itabil­ity. But loom­ing in the back­ground is a Com­pe­ti­tion Com­mis­sion in­ves­ti­ga­tion into the com­pany’s al­leged over­charg­ing of cus­tomers for chem­i­cals. Sa­sol won the ap­peal at the com­pe­ti­tion ap­peal court, and ac­cord­ingly re­versed the R0,5bn it had set aside for a pos­si­ble fine, tak­ing the amount into the in­come state­ment. But it isn’t over yet. The Com­pe­ti­tion Com­mis­sion has since in­di­cated that it plans to ap­peal against the de­ci­sion.

Long-time CEO David Con­sta­ble is leav­ing, hav­ing de­cided not to ex­tend his con­tract. He will still be around for a while, while a re­place­ment is sought. But chang­ing CEOs can have a big ef­fect on a group such as Sa­sol.

Pic­tures: iS­TOCK

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