Sasol reported lower earnings for the six months to end-December, as weaker oil and chemicals prices and impairment charges weighed on profitability.
However, strict cost controls and lower capital spending helped the group generate positive free cash flow for the first time in four years, the company said on Monday.
HEPS fell 34% to R9.27, while earnings before interest and tax (ebit) were down 52% to R4.6bn. The decline was driven largely by noncash remeasurement items and impairments of about R7.8bn, mainly linked to the Secunda liquid fuels refinery and a gas development project in Mozambique.
Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) decreased 12% to R21bn, showing a 17% fall in the average rand Brent crude oil price and weaker global chemicals prices. The company said these pressures were partly offset by improved refining margins, higher sales volumes and lower fixed costs.
Group revenue remained broadly unchanged at R122.4bn, supported by a 3% increase in sales volumes despite what the company described as a softer macroeconomic environment.
Operationally, Sasol reported an improved performance in its Southern African business, with production volumes at Secunda rising 10%. The increase was driven by higher gasifier availability, the absence of a planned shutdown and improved coal quality following the commissioning of a destoning plant at Sasol Mining.
In contrast, the international chemicals segment still faced weak demand conditions and lower US ethylene margins, but the company said cost-cutting measures supported an increase in ebitda in dollar terms.
CEO Simon Baloyi said the company was making “consistent progress in the implementation of our strategic initiatives as set out in our Capital Markets Day plan.
“This is strengthening our foundation business, helping us to mitigate ongoing global market volatility and macroeconomic headwinds, building resilience for the future,” Baloyi said.
Sasol generated free cash flow of R794m in the period, supported by lower capital spending and “disciplined cost management”.
Capital expenditure fell 43% to R8.5bn, mainly due to fewer shutdowns, reduced spending on Mozambique gas projects and lower environmental compliance costs as programmes near completion.
Net debt (excluding leases) decreased to R63.3bn, while liquidity remained above $4bn. The company said no interim dividend was declared as net debt remained above the company’s policy threshold.
During the period, Sasol secured an additional 300MW of renewable energy capacity, bringing its total contracted renewable power in South Africa to more than 1,200MW as part of efforts to reduce emissions and operating costs.
The company lowered its full-year capital expenditure guidance to between R22bn and R24bn, citing optimisation measures.
It also cut its outlook for international chemicals earnings, pointing to weaker macroeconomic assumptions, weaker demand and an unplanned outage at its Louisiana ethylene operations
Sasol cautioned that operating conditions are expected to remain challenging amid geopolitical tension, shifting global trade dynamics and weakness in some chemical markets, but said cost discipline and operational improvements should support further cash generation and debt reduction.
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