Sasol profit up to 65% higher

Johannesburg - South African petrochemicals group Sasol said on Wednesday it expects its first-half headline earnings to rise year-on-year, but cut its 2009 outlook forecast owing to poor market conditions.

Sasol said headline earnings per share, which strips out certain one-off, non-trading and financial items, was expected to rise between 55% and 65% for the six months to end-December, from the same period a year ago.

Last year, the company reported first-half headline earnings per share of R14.56.

"The expected increase in earnings is mainly due to the weakening of the rand against the US dollar and an increase in crude oil and product prices," Sasol said in a statement.

"Overall production volumes were also higher as a result of additional capacity and improved operations."

Sasol said it now expected 2009 earnings to grow slightly less than estimated. It had previously said it expected robust growth in 2009.

"Market conditions have deteriorated in recent months due to the global economic downturn, with lower than expected crude oil and product prices as well as lower product demand," it said.

Sasol said the impact could be partially offset by proceeds from the synfuels hedge, which expires in May 2009.

The forecast excludes any provision for fines that Sasol might be facing as a result of an investigation launched by the South African competition authority to examine possible price-fixing by gas and petroleum companies.

The company was fined €318m by the European Commission last year for its role in a paraffin wax price-fixing cartel.

The company said with its cash flow and strong balance sheet it was well positioned in the current economic climate and was meeting all debt service requirements.

Sasol also said it would review and re-prioritise all its planned capital expenditure projects of 16 billion rand for 2009.

Sasol's financial year ends in June, and the company is due to issue its first-half results on March 9.

- Reuters