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Johannesburg - South Africa's biggest energy company Sasol [JSE:SOL] has voiced plans to significantly ramp up investment in its key growth area - gas-to-liquid production - which could rocket the company's gearing by over 40% in the medium term.
Chief financial officer Christine Ramon told media on Monday that Sasol would look for project finance for several big projects which are currently in their feasibility stages - a big change from the current virtually ungeared position of 1%.
Ramon was speaking at the presentation of Sasol's full-year results to end-June 2010, during which the company presented a set of market-pleasing financial numbers somewhat higher than previous management guidance.
Sasol increased headline earnings per share by 5% to 2 657c, earnings per share went up 17% to 2 668c while shareholders received a bigger slice of the pie thanks to a 24% rise in total dividend to 1 050c/share.
Management sees earnings as on an upward trend, bar the most immediate risk of the high rand/dollar exchange rate.
"We are returning to our policy of higher stakeholder return in the form of dividends," said Ramon.
Meanwhile, analysts said the move to a higher gearing ratio is a good one, provided that Sasol invests in solid projects.
Mark Rule, equity analyst at BoE Private Clients, said Sasol's focus on the natural gas industry will serve the group well.
"Key for profitability is the differential between the gas and oil prices," said Rule.
