Chemicals and energy group Sasol expects a sharp increase in full-year earnings, supported by higher chemicals prices and cost-cutting measures.
The company projects headline earnings per share (HEPS) of R33.60-R36.30 in year ended June, an increase of 85%-100% from R18.19 in the prior year, the company said in a statement on Tuesday.
By midday, Sasol’s share price was up 7.44% to R91.09.
The company said the improved earnings were due to higher average chemicals basket prices and reductions in impairments, which fell to R20.7bn from R74.9bn the previous year.
The prior impairments affected earnings and were mainly related to the Secunda and Sasolburg liquid fuels refineries, Mozambique exploration assets and parts of the chemicals portfolio. The reduction in impairments resulted in fewer non-cash charges compared to the previous year.
Previously, the company announced cost-cutting measures aimed at improving profitability, including efforts to optimise production efficiency and reduce operating costs. Sasol made changes to coal quality and supply to support gasification performance at its Secunda operations.
Sasol recorded a net cash settlement of R4.3bn (before tax) with Transnet, resolving a longstanding legal dispute over pipeline tariffs for crude oil transportation. This provided a one-time cash inflow during the period. The company also reported a R2.9bn reduction in asset rehabilitation provisions. These provisions, intended for environmental restoration obligations, were lowered following updated assessments and revised rehabilitation plans, resulting in reduced non-cash expenses.
Despite some gains, Sasol faced several challenges. The average rand price of Brent crude oil fell by 15%, refining margins weakened, and sales volumes dropped by 3% due to lower production and weaker demand, the company said.
Pressure on Sasol’s assets continued, with the Secunda and Sasolburg liquid fuels refineries remaining fully impaired amid ongoing economic challenges and industry shifts.
Exploration assets in Mozambique were impaired by R4.4bn, driven by higher country risk and lower commodity price forecasts.
Sasol expects its adjusted earnings before interest, tax, depreciation, and amortisation (ebitda) to fall 10%-17%, resulting in a range of R50bn-R54bn, down from R60bn recorded in the previous year. This decrease is attributed to weaker commodity prices, tighter refining margins, and reduced sales volumes.
The company is expected to release the results on 25 August.
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