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| Operational review (continued) Pages | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | |
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| Chemical cluster |
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| Business segment contributions to chemical cluster |
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| Chemical cluster financial highlights |
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2007 |
2006 |
%
change |
| Turnover |
Rm |
58 881 |
49 284 |
19 |
| Operating profit/(loss) |
Rm |
4 293 |
(1 471) |
392 |
| Effect of capital items |
Rm |
538 |
(4 107) |
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| Contribution to: |
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| group operating profit |
% |
17 |
(9) |
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| group profit/(loss) |
Rm |
3 922 |
(1 422) |
376 |
| Cash flow from operations |
Rm |
5 760 |
4 579 |
26 |
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| Chemical cluster operational highlights |
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2007 |
2006 |
%
change |
| Total sales |
Mt |
8,3 |
7,2 |
14 |
| Total production |
Mt |
8,8 |
7,7 |
14 |
| Sales per employee |
t |
682 |
556 |
23 |
| Recordable case rate |
RCR |
0,83 |
0,87 |
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 The chemical cluster, established to channel the focus of our global
chemicals businesses, had a good year despite high feedstock prices.
Most businesses delivered above-budget performances, with the
cluster’s total operating profit before capital items surpassing budget
expectations by 43% and improving by 392% on the prior year. Sasol
Olefins & Surfactants (Sasol O&S) was the exception as high oil prices
continued to exert pressure on its margins.
We made a number of leadership changes following the retirement
of two of our managing directors. The benefits of new energy and
fresh perspectives are already emerging at Sasol Polymers, Sasol
Solvents, Sasol Nitro, Sasol Wax and our Merisol joint venture.
In line with the Sasol group strategy, the growth drivers for the
chemical cluster are threefold. Firstly, we aim to benefit from the
additional Fischer-Tropsch (FT) feedstock streams from the planned
expansion of the South African energy cluster. Secondly, we are
investigating opportunities outside South Africa where we can
access competitive conventional petrochemical feedstock. In the
longer term, we also plan to leverage opportunities from the
international energy cluster’s growth ambitions.
In March Sasol terminated the planned divestiture of Sasol O&S as no
offers that met our expectations had been received. We thus believed
it was in the best interests of shareholders to retain Sasol O&S
and improve its performance. Much of the planning for a rigorous
turnaround was put in place during the period that Sasol O&S was
for sale. This has allowed us to move ahead decisively on restructuring
the business, which is expected to take three to five years, after which
the strategic options for Sasol O&S will be reconsidered.
Sasol Polymers is poised for growth in the coming year as projects
to nearly double its output come on stream at a time when
demand for its products is strong. Its priority is to achieve optimal
performance from the Project Turbo initiatives and its investments
in polymer production facilities in the Middle East, while seeking
further feedstock-based opportunities.
Sasol Solvents expects another healthy performance in the year
ahead, notwithstanding likely margin pressure as feedstock prices
remain volatile. It will critically review its product portfolio and
endeavour to run plants at higher capacity. A particular emphasis
will be on improving the robustness of those operations that do
not enjoy an integrated feedstock position.
Sasol Wax continues to expand its speciality application products,
but high oil prices are likely to pressure margins in the year ahead.
The business will optimise its production capacity of hard
wax made through the FT process to support market demand,
and is investigating plans to double its wax production capacity
in South Africa by 2013.
Sasol Nitro is expected to maintain its solid performance in the year
ahead, as the explosives accessory business continues to expand
and the outlook for the fertiliser market remains favourable.
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 Reiner Groh, group general manager, chemical cluster. |
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