Massive R44 billion loss for Sasol

Sasol has recorded a R44 billion loss for its latest financial year amid a challenging economic environment and a massive R75 billion impairment.

In its financial results for the year ended 30 June 2024 (FY24), Sasol said that its results were negatively impacted by challenging market conditions, with heavy pressure on constrained margins and depressed chemicals prices, which resulted in a 5% drop in turnover to R275.1 billion.

Nevertheless, the group said these factors were partially offset by the more vital rand oil price, improved refining margins, reduced total costs and higher sales volumes.

Moreover, Sasol’s more robust operational performance in Q4 contributed to a stronger overall performance in the year’s second half.

The group recorded a loss before tax and interest of R27.3 billion compared to earnings before interest and tax of R21.5 billion in the prior year.

The total loss for the year was R44.3 billion, versus total earnings of R9.3 billion in 2023.

This decline was mainly due to increased asset impairments and lower earnings before interest, tax, depreciation, and amortisation, which translated to losses and reduced derivative gains.

The group recorded an impairment loss of R56.7 billion net of tax (R74.9 billion gross), mainly due to
the following impairments:

• “Chemicals America Ethane value chain (Alcohols, Alumina, Ethylene Oxide, Ethylene Glycol and associated shared assets) cash-generating unit (CGU) of R45.5 billion net of tax (R58.9 billion gross). The impairments are primarily driven by external conditions, including prolonged softer market pricing and outlook;

• A total of R3.9 billion net of tax (R5.3 billion gross) relating to the Chemicals Africa Polyethylene, Chlor-Alkali & Polyvinyl Chloride, and South African Wax value chain CGUs, of which R0.9 billion net of tax (R1.2 billion gross) was impaired at 31 December 2023. The further impairment at 30 June 2024 relates to the Polyethylene CGU as a result of oversupply and reduced demand in the global market. The South African Wax value chain GU remains fully impaired; and

• Secunda liquid fuels refinery CGU of R5.7 billion net of tax (R7.8 billion gross), which remains fully impaired at 30 June 2024.

The prior year saw Sasol only record impairments of R33.7 billion (gross).

The group also recorded a basic loss per share of 69.94 cents – a significant drop from the basic earnings of 14.00 cents per share in FY23.

The group’s headline earnings per share also dropped by 66%, from 53.75 cents in FY23 to 18.19 in FY24.

The group did not declare a final dividend, so its full-year dividend dropped by 88% from 17.0 cents per share in FY23 to 2.00 cents per share in FY24. However, the group still declared an interim dividend in FY24.

“The company’s dividend policy was based on 2.5x to 2.8x Core headline earnings per share (CHEPS). The disconnect between headline earnings and cashflow generation, as well as elevated leverage levels, has necessitated a revision to the company’s dividend policy,” said the group.

Below are the group’s key financial metrics:

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