Energy Companies

Sasol is an international integrated chemicals and energy company that produces and markets chemical and energy products competitively to create superior value for customers, shareholders and other stakeholders.

Sasol has three main business units: Mining, Exploration and Production International, and the Strategic Business Unit. The Company´s Strategic Business Unit has three following main segments: Energy (liquid fuel sales, piped gas and electricity sales), Base Chemicals (polymer products production & sales, sales of solvents products, fertilisers and explosives) and Performance Chemicals (salex of products globally, directly to business customers (B2B)).

According to the Annual Financial Report total turnover of the Company decreased by 6% from R203.6 billion to R190.4 billion in 2020 and increased by 12% from R181.4 billion in 2018 to R203.6 billion in 2019 mostly due to exchange rate effects and higher product prices for crude oil.

Loss before interest and tax of R117.4 billion represents a decrease of 1372% from earnings of R9.7 billion in 2019 and R17.7 billion in 2018 mainly as a result of deterioration in the US dollar export coal prices, lower export sales volumes and higher external coal purchases earlier in the financial year. To compare, EBIT decreased by 45% and 44% in 2019 and 2018 respectively.

Materials, energy and consumables used in 2020 amounted to R90 109 million, a decrease of R480 million, or 1%, compared with R90 589 million in 2019, which increased by 18% from R76 606 million in 2018. The decrease in these costs between 2020 and 2019 was mainly due to the lower processed volumes of oil at Natref as a result of the shutdown in May and June.

Selling and distribution costs in 2020 amounted to R8 388 million, which represents an increase of R552 million, or 7%, compared with R7 836 million in 2019, which increased by R776 million, or 11%, compared with R7 060 million in 2018. The variation in these costs was mainly attributable to increased freight, packaging and shipping costs. Selling and distribution costs represented 4% of sales in 2020.

Maintenance expenditure in 2020 amounted to R10 493 million, which represents an increase of R266 million, or 3%, compared with R10 227 million in 2019, which increased by R1 064 million, or 12%, compared with R9 163 million in 2018. Maintenance expenditure increased in 2020 compared to 2019 mainly due to inflation.

Exploration expenditure and feasibility costs in 2020 amounted to R608 million, which represents a decrease of R55 million, or 8%, compared with R663 million in 2019, which increased by R311 million compared with R352 million in 2018. The decrease in 2020 as compared to 2019 was largely attributable to cash conservation measures in 2020.

The productivity of the Company decreased by 4% as a result of unplanned infrastructure downtime, safety incidents in the first half of the year and the ongoing geological complexity challenges at Syferfontein and Sigma collieries.

Total turnover for Mining Segment decreased by 5% from R20 876 million to R19 891 million in 2020 and increased by 12% from R181.4 billion in 2018 to R203.6 billion in 2019 mostly due to exchange rate effects and higher product prices for crude oil. Earnings before interest and tax for Mining Segment of R2 756 million represents a decrease of 41% when compared to the prior year, mainly as a result of a 30% deterioration in the US dollar export coal prices, lower export sales volumes and higher external coal purchases earlier in the financial year.

Segmentally, total turnover for Exploration and Production International increased by 0,4% from R5 184 million in 2019 to  R5 204 million in 2020 due to higher volumes in Gabon and a weaker rand/US dollar exchange rate. Earnings before interest and tax for Exploration and Production International from Mozambican producing operations was R2 464 million (excluding translation losses of R914 million) compared to R2 507 million in the prior year. The decreased earnings before interest and tax is largely due to lower sales prices and volumes.

Total turnover for Energy Segment decreased by 19% from R83 803 million in 2019 to R67 901 million in 2020, mainly due to the impact of lower Brent crude oil prices, lower liquid fuels sales volumes resulting from the impact of the extended COVID-19 lockdown in South Africa and lower refining margins, partly offset by the weaker rand/US dollar exchange rate. Loss before interest and tax for Energy Segment decreased by R23 244 million or 140% compared to the prior year. EBIT margins decreased by 30% to –10%. The decrease in earnings before interest and tax is mainly due to impairments recognised of R12,4 billion, the impact of lower Brent crude oil prices, lower sales volumes resulting from the impact of the extended COVID-19 lockdown in South Africa and lower refining margins at Natref.

Total turnover for Base Chemicals Segment increased by 8% from R48 813 million in 2019 to R52 683 million in 2020, mainly as a result of higher sales volumes and a weaker rand/US dollar exchange rate. The Base Chemicals business benefitted from 19% higher sales volumes mainly as a result of ramping up of US polymer producing assets. Loss before interest and tax for Chemical Segment increased by R69 373 million from R1 431 million in 2019 to R70 804 million in 2020, while EBIT margin decreased from –3% to –134%.

Turnover for Performance Chemicals segment increased by 1% from R68 296 million to R69 197million mainly due to increased sales volumes. EBIT decreased from a loss of R7 040 million to a loss of R24 455 million mainly as a result of higher impairments in 2020 (R27 666 million) compared to 2019 (R13 151 million) as well as the generally soft macroeconomic environment in Europe and Asia, impacting sales negatively in the first half of 2020.

Cash generated by operating activities in 2020 decreased by 18% to R42 384 million, largely attributable to the softer macroeconomic environment during the first six months of the financial year which was further impacted by the severe economic consequences of lower oil prices and the COVID-19 pandemic during the second half of the financial year.