Johannesburg - Sasol [JSE:SOL] said its fortunes for the remainder of the financial year turned more on the rand-dollar exchange rate than any other single factor, but group CEO Pat Davies nonetheless flew to the defence of a free-floating exchange rate.
Attempts by government to influence its value would be "unwise". Davies said: "The value at which the rand is trading is basically determined by global checks and balances, and it probably wouldn't be very sensible of the government to interfere with this by fiscal or any other methods."
The stronger rand hit the petrochemical giant hard in the past half-year to end-December, and is one of the main reasons for the 51% fall in operating profit to R10.5bn. Sasol is highly vulnerable to variations in the exchange rate, and a 10c shift in rand value has an R800m impact on the group's operating profit.
Instead of focusing on the rand, Davies said he would prefer to see government turn its attention to stimulating investment in the country, not only from overseas backers but also from existing local ones.
"The best way [to help the economy] is to increase the country's competitiveness. In the meantime, it's up to us to adapt so that we can remain competitive," he said.
Sasol's turnover for the six months fell by 30% to R58.1bn, largely as a result of a 14% strengthening of the rand and drastic falls in prices of commodities like fuel, crude oil and chemicals. Headline earnings per share were 51% lower at 1 068c, while the interim dividend was increased by 12% to 280 cents per share.
Davies said that though resource prices are starting to stabilise and global markets for chemicals are recovering, he remains cautiously optimistic about the prospects for the year.
"The profit margins for refineries remain under pressure, while the strong rand continues to have an impact on profitability. It's very difficult to forecast where we will be at the end of the year," he said.