99%: When a Strong Rand Hurts and a Giant Stumbles
Ninety-nine percent is not a number you expect to see attached to a company as large and embedded in South Africa’s economy as Sasol.
Yet that is the headline figure dominating the conversation after the company reported a 99% drop in earnings for the six months to December. At face value, it sounds like a catastrophe. In reality, the story is more complicated, and more revealing.
This episode of Number of the Day unpacks why the number is so extreme, starting with how earnings are measured in South Africa. While earnings per share collapsed, Sasol has indicated that headline earnings per share are expected to fall by between 29% and 40%, still painful, but far from total collapse. The difference lies in massive write-downs and impairments, particularly at the Secunda plant, reflecting the shrinking long-term value of coal-based fuel in a world moving away from dirty energy.
The episode then widens the lens. Sasol’s pain sits alongside two forces that are usually celebrated: a strong rand and falling global oil prices. For consumers, this means cheaper fuel and imports. For Sasol, which sells fuel in dollars and earns back in rands, it means lower revenue at the worst possible time.
The conversation also touches on the human cost. Sasol employs tens of thousands of people directly and supports an entire secondary economy. Shareholders, including many historically disadvantaged South Africans who bought into broad-based ownership schemes, have watched value erode over the years.
In the end, 99% is not just a company story. It is a snapshot of South Africa’s economic contradictions: a greener future colliding with legacy industries, good news for consumers hurting producers, and the uncomfortable reality that even national champions are not insulated from global shifts.
Catch up on all the Number of the Day episodes here: https://www.enca.com/number-day-podcast