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Sasol, a South African petroleum and oil company, announced on Monday it has decided to abandon its plan for a rights issue, following significant progress on its transformation strategy.

The chemicals and synthetic fuel producer released its interim results for the six months ended 31, December 2020 today, showing that its earnings grew by more than 100 per cent to 15.3 billion rand from 4.5 billion rand reported in the prior period. Its profit before interest and tax (EBIT) more than doubled to 21.7 billion rand in the six-month period.

Last year, Sasol said it would issue up to $2 billion (29.5 billion rand) of shares in the second half of 2021 to help address its debt. However, after a successful programme of asset sales and a restructuring of parts of its business, the company was able to reduce its total debt to 126.3 billion rand ($8.5 billion) at the end of December, compared to 189.7 billion rand six months earlier.

“A decision was made not to pursue a rights issue given the current macro-economic outlook, and the significant progress made on our response plan initiatives,” the company said. “The balance sheet deleveraging pathway will continue to be prioritised to ensure that we operate within our financial covenants.”

The company said it was able to make progress on its turnaround strategy despite the COVID-19 crisis that led to low crude oil prices, softer chemical prices, plant downtime, thereby impacting its cash flow. Sasol said the positive performance was "as a result of a strong cash cost, working capital and capital expenditure performance."

Following the announcement of the latest results, Sasol's shares jumped on the Johannesburg Stock Exchange (JSE) to the highest in a year. According to Bloomberg, the company's shares gained 4.2 per cent to 211.50 rand by 9:30 a.m.

Sasol is the third biggest South African company, after FirstRand Group and Standard Bank Group. It was the most trusted company in South Africa in 2020, according to Forbes. Sasol has operations in about 30 countries, including Nigeria. It has a 10 per cent interest in Escravos GTL, a 33,000-barrel-per-day gas-to-liquids (GTL) project in Nigeria. Other partners in the project include the Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited.