Another huge blow for Sasol

Sasol is expecting a massive drop in earnings amidst a challenging period for the group.

In a trading update for the six months ended 31 December 2024, Sasol said that earnings per share are expected to be between R6.00 and R8.00 compared to the prior half-year’s R15.19

This represents a drop in bets between 47% and 61%.

Headline earnings per share are expected to be between R13.00 and R15.00 compared to the prior half-year’s R20.37, representing a decrease of between 26% and 36%.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to be between R22 billion and R25 billion compared to the prior half-year’s R28 billion, dropping by between 11% and 22%;

The decrease in earnings in the period is primarily due to a 13% decline in the average rand per barrel of Brent Crude Oil price and a significant decline in refining margins and fuel price differentials.

There was also a 5% decrease in sales volumes associated with lower production and/or lower market demand

There were also notable non-cash adjustments (before taxation), including:

• A net loss of R6.2 billion from remeasurement items compared to a net loss of R5.8 billion in the prior half year, mainly due to the Secunda and Sasolburg liquid fuels refinery cash-generating units remaining fully impaired. The full amount of costs capitalised during the current period of R5.6 billion are impaired;
• Unrealised losses of R0.1 billion on the translation of monetary assets and liabilities, and valuation of financial instruments and derivative contracts compared to unrealised gains of R2.7 billion in the prior half year.

However, Sasol said that these negative financial impacts were partially offset by an increase in average
chemicals basket prices, stringent cost management and efficient capital expenditure.

Sasol will release its interim results for the period on Monday, 24 February 2025 at 09:00.

Tough time for the group

The drop in earnings follows Sasol’s posting of a substantial R44 billion loss in its latest financial year amid a challenging economic environment.

The decline was mainly due to increased asset impairments, which reached a total of R75 billion, and lower EBITDA, which translated to losses and reduced derivative gains.

When it comes to growth, the large-scale emitter plans to revive its international chemical business, which includes a huge US complex to boost earnings and opens up the possibility of potentially listing it.

Sasol CEO Simon Baloyi said that the company’s $12.8 billion Lake Charles chemicals facility in Louisiana could play a massive role in generating cash and raising investor confidence.