Sasol flags lower interim earnings, share price slides

Sasol Secunda. Photo: Supplied

Sasol Secunda. Photo: Supplied

Published Feb 12, 2024


Sasol’s share price fell hard by 4.1% on Friday after it said interim profit had been hit hard by weaker oil and petrochemical prices, unstable product demand and inflation cost pressures.

A trading statement by the fuel and chemicals company said adjusted earnings before interest tax depreciation and amortisation was expected to fall between 0% and 18% for the six months to December 31.

Adjusted Ebitda was expected to be between R26.2 billion and R29.4bn compared to the prior half’s R32bn.

Sasol’s share price traded at R146.21 on Friday afternoon, this after steadily trading lower over 12 months from R278.66 at the same time a year previously. The share closed the day at R146.55, 3.9% lower.

“Despite some operational improvements in South Africa, persistent under-performance of the state-owned enterprises involved in Sasol's value chain and the weaker global growth outlook continue to impact Sasol's business performance,” the group directors said.

Earnings per share (Eps) were expected to be between R13.33 and R16.58 compared to the prior half year EPS of R23.23, a decline of between 29% and 43%.

Headline earnings per share (Heps) were expected to be between R17.90 and R22.22, or to decline by between 28% and 42% for the interim period.

Non-cash adjustments included unrealised gains of R2.7bn on the translation of monetary assets and liabilities, and valuation of financial instruments and derivative contracts.

There was also a remeasurement net loss of R5.8bn, mainly due to R3.9bn relating to the Secunda liquid fuels refinery cash generating unit (CGU). The liquid fuels component of the Secunda refinery was fully impaired at June 30, 2023.

The value-in-use was further negatively impacted by an increase in forecast Eskom electricity tariffs and lower short-term Brent crude oil prices, resulting in the full amount of costs capitalised during the period being impaired.

There was also a R600 million charge relating to the full impairment of Chemicals Africa's Chlor Alkali and Polyvinyl Chloride (PVC) CGU, and R500m partial impairment of the Polyethylene CGU mainly as a result of lower selling prices associated with reduced market demand.

Sasol intends to release its 2024 interim financial results on February 26.

In August, Sasol announced it had produced its first green hydrogen at Sasolburg during the commissioning of a project to repurpose an operational electrolyser to use solar-sourced renewable electricity to split water into hydrogen and oxygen.

Engineering News reported Sasol had set aside R350 million for the pilot project, which was expected to produce up to five tons of green hydrogen daily.