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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 6, 2025

Gross Operating Surplus

A View on Company Profits

2024 Q4

Company profitability is vital for investors and the government. In South Africa, the Gross Operating Surplus (GOS) indicates positive growth, with profits surpassing inflation in late 2024. Notable gains in the Agricultural sector (68.8%) contrast with modest growth in Mining and Personal Services, reflecting an optimistic economic outlook post-election.

Company profitability is a critical concern for both investors and the government. Investors assess the potential returns they can expect, while the government evaluates the effects of policy changes on tax revenue and the overall economy.

A key method for assessing the profitability of a sector is estimating the Gross Operating Surplus (GOS) at regular intervals, specifically quarterly in this case. In South Africa, the GOS shows some fluctuations but generally aligns with trends in GDP inflation, as depicted in the accompanying graph. During the third and fourth quarters of 2024, company profits outpaced inflation, indicating that profits grew faster than production costs during this period.

The overall increase in GOS is encouraging news, as rising profitability raises the prospects for investment and stimulates further economic growth. Notably, the Agricultural sector exhibited remarkable annual growth, with “gross profits” soaring by 68.8%. In comparison, profits in the Mining and Personal Services sectors rose by 6.5% and 8.0%, respectively.

The significant increase in total GOS reflects a positive market sentiment that pervaded the economy throughout 2024, especially following the general elections and the establishment of the Government of National Unity (GNU), along with a more stable electricity supply since May 2024. This uptrend boosts production output and returns for all market participants, paving the way for a much-needed increase in investment in South Africa.

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More Coverage

Manufacturing Production

August 2025
In August, South Africa’s manufacturing output further declined by 1.5%, following a 1.3% decrease in July. This downturn was significantly below market expectations, which had forecasted a 0.3% increase for August. The Purchasing Managers’ Index (PMI) also fell by 1.4 points, from 50.8 in July to 49.5 in August 2025, indicating a less favourable business climate anticipated by manufacturers for the month.

Reviving South Africa’s Economy

A Balanced Path to Growth, Jobs, and Prosperity
South Africa faces significant economic challenges that threaten the nation’s stability and future prosperity. Over the past decade, sluggish growth, high unemployment—particularly among the youth—and infrastructure decay have become critical issues. These problems are compounded by inconsistent policies, energy shortages, and a prevailing uncertainty in the investment climate. The African National Congress (ANC) has recognised this urgency, unveiling a ten-point plan aimed at revitalising the economy. While this approach shows a concerted effort to address systemic issues, a complementary set of reforms proposed in the Alternative Economic Blueprint offers a promising pathway toward sustainable growth, job creation, and economic freedom.

Gold and Foreign Exchange

September 2025
The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.

Private Sector Credit Extension (PSCE)

August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.

Internation Trade and Trade Balance

August 2025
International trade measures South Africa’s demand for foreign goods and services relative to its demand for domestically produced products in the global market.
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