State-owned companies bleed Sasol
Sasol says its financial results have been impacted by the declining condition of state-owned enterprises (SOEs) and the volatility of global markets.
In its annual financial results for the 12 months ended 30 June 2023, Sasol said that the underperformance of SOEs and local socio-economic issues have affected the group’s volumes and profitability.
Although the company benefitted from the higher oil price and a weaker rand, the group’s profitability was also constrained by the challenges in its South African mining operations and the reduced margins in its American and Eurasian segments – driven by difficult market conditions.
Additionally, the company’s profit from the disposal of businesses declined from R8.5 billion in 2022 to R0.7 billion in 2023.
In positive news, the group’s earnings benefitted from the R6 billion in gains on the translation of monetary assets and liabilities and the valuation of financial instruments and derivative contracts compared to the R17.6 billion loss in 2022.
That said, earnings were still hurt by a net loss of R33.9 billion on measurement items, which mainly related to the Secunda liquid fuels refinery Cash-generating units (CGU) (R35.3 billion), the full impairment of the South African wave CGU of R0.9 billion, the impairment of the Essential Care Chemicals CGU in Sasol China (R0.8 billion) and the reversal of impairment processed in 2019 on the Tetramerisation CGU in Lake Charles (R3.6 billion).
Moreover, the group’s total debt rose from R105,1 billion (US$6,5 billion) in 2022 to R125,6 billion (US$6,7 billion) in 2023.
Capital expenditure in capital project-related payables also increased from R22.7 billion during the prior year to R30.9 billion, which was mainly due to the scheduled total Synfuels East factory shutdown and the intensification of activities in Mozambique as well as compliance programmes (Environmental Compliance Project and Clean Fuels).
Despite the challenging economic environment, the group’s cash generated by operating activities grew by 15% to R64.6 billion.
Despite the group’s basic earnings per share taking a nose dive from 62.34 cents in 2022 to 12.00 cents, the group’s headline earnings still increased from 47.58 cents in 2022 to 53.75 cents in 2023.
The group’s dividend did, however, decline from 1,470 cents in 2022 to 1,000 cents in 2023.
Read: Double blow for Sasol
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