Today's edition
Coffee Run
Good morning. Shoprite has decided the fastest way into coffee is to buy 400 shops that already sell it. Sasol turned a war in the Middle East into its best year in five and is still paying its shareholders nothing, and that same war puts petrol up R1.34 a litre on Wednesday.
One company is spending, one is holding on to it, and you are paying for the barrel either way. Let's get into it.
MARKETS
GROUNDS FOR EXPANSION
Shoprite has acquired South Africa's biggest coffee chain, all 400 stores of it
Vida e Caffe opened on Kloof Street in 2001 and turns 25 this year. On Tuesday, alongside results for the 52 weeks to 28 June, Shoprite said it had signed an agreement to buy it: roughly 400 corporate and franchise stores across eight African countries.
South Africa's largest grocer sold R270.8 billion of merchandise over the year and does not run a stand alone food chain of its own. Chief executive Pieter Engelbrecht framed it as a change of habit: Shoprite spent decades building everything itself, and has spent the past decade buying instead, wherever somebody else already had the expertise and the speed.
What 400 shops get you:
- Vida's stores sit where supermarkets do not: high streets, petrol forecourts, drive throughs and office blocks.
- Shoprite gets the sites, the formats and the people running them without putting up a single building.
- Others got there first. Famous Brands bought Mugg & Bean in 2009 when it had 79 restaurants and has grown it past 300, and Food Lover's Market has owned Seattle Coffee Company since 2015.
The deal is small enough that the JSE does not require it to be categorised. It was signed in August, it needs regulatory approval, and it only counts from 2027.
BARRELS AHEAD
Sasol needed oil at $49 a barrel, got $79, and still will not declare a dividend
Sasol needs oil at $49 a barrel to cover its costs. For the year to 30 June it averaged $79, because the US and Iran spent months fighting over the Strait of Hormuz and the price went with it. Secunda, which turns coal and gas into petrol, had its best production run in five years at 160,000 barrels a day. Earnings before interest, tax and write-downs came in at R61 billion, up 17%, on turnover of R272 billion.
Shareholders got no final dividend. The reason is a rule Sasol wrote for itself: nothing is paid out until net debt sits sustainably below $3 billion, and at year end it was $3.3 billion, down 11% but still $300 million the wrong side of the line. Cash was the softer part of the year. Free cash flow fell 5%, because the same conflict that lifted prices lifted the value of the fuel sitting in Sasol's tanks, and the results absorbed R16.8 billion of write-downs, R7.7 billion of it against the Secunda liquid fuels refinery.
Chief executive Simon Baloyi called it a decisive year of delivery. The share price is up 83%, which is the only return anyone has had.
BAGEL BITE
Which ancient wonder of the world still stands today?
A. Hanging Gardens of Babylon
B. Colossus of Rhodes
C. Great Pyramid of Giza
DOING THE ROUNDS
Petrol goes up R1.34 a litre on Wednesday, and diesel by as much as R3.15. Filling a 50 litre tank costs about R67 more, and a diesel bakkie considerably more than that. Gauteng petrol reaches R26.92. The rand actually strengthened over the review period, from R16.46 to the dollar to R16.21, and it made almost no difference, because Brent averaged $87.85 against $82.37 while the Strait of Hormuz stayed a war risk. Petrol started the year around R20. Full story →
Eskom's finance chief is retiring after 24 years. Calib Cassim spent Monday morning explaining why ferrochrome smelters pay 62 cents a unit when Eskom's average price is R2.20, and announced his departure in the same statement. He goes in the financial year to March 2027, one of those years having been spent as acting chief executive. Eskom made R30.3 billion after tax, against R14 billion restated, while municipal arrears rose 17.9% to R111.6 billion. The board wants a replacement in the seat before the end of December. Full story →
Shein finally went public, and the shares fell as much as 10% on the first morning. New York would not have it and London stalled when Beijing withheld approval, so four years and three cities later it listed in Hong Kong at HK$48.56 a share, below the HK$49.50 it had asked for. That values the fast fashion group at a little over $26 billion, against nearly $100 billion in 2022. Founder Sky Xu attended the gong ceremony and said nothing. Full story →
South Africa's trade surplus widened to R20.1 billion in July, from R17.2 billion in June. It grew because the country bought less, not because it sold more. Exports edged up 0.8% to R194 billion on cars, manganese and coal, while imports slipped to R173.8 billion as refined fuel, crude and smartphones came in lighter. Almost all of the surplus came from trade with the rest of Africa, worth R31.97 billion, against a R30 billion deficit with Asia. Full story →
WEATHER
BAGEL GAMES
Have you got what it takes to win today’s Wordle? Play here →
THE ANSWER
As for the Bagel Bite, the answer is: C. Great Pyramid of Giza
Built more than 4,500 years ago as a tomb for the pharaoh Khufu, the Great Pyramid was the tallest human-made structure on Earth for thousands of years. The other six ancient wonders, including the Hanging Gardens and the Colossus of Rhodes, were destroyed or lost long ago. It was made from millions of huge stone blocks, fitted together with remarkable precision. Visitors can still see it near Cairo in Egypt today.
That's your Wednesday sorted. Enjoyed it? Forward it on, a friend can subscribe in a click. Written by the Business Bagel crew.
