Johannesburg - Petrochemicals group Sasol [JSE:SOL] said its
expectations for a strong year had been boosted by a good quarterly performance
at its synthetic fuels unit.
"We remain confident that, based on the production
guidance and our macroeconomic assumptions, we will deliver solid operational
performance and earnings for the (2012/13) financial year," chief
financial officer Christine Ramon said on Monday.
Currency and oil price volatility were likely to persist
given the uncertain global economic outlook, she also said in a trading update.
Output of synthetic fuels from July-September - its first
quarter - rose 12% to 1.8 million tonnes. Sasol, the world's top maker of motor
fuels from coal, kept its full-year production forecast at 7.2-7.4 million
The quarter was also boosted by a weaker rand, which helps
exporters as it lifts profit when overseas earnings are brought home. The
average Brent crude oil price, however, softened and chemical prices remained
depressed, hitting Sasol's chemicals units, where demand remained soft, the
Sasol has been diversifying into chemicals, gas and
clean-energy projects to benefit from low gas prices. Ramon said the company
had reviewed its capital projects, including a plan to build gas-to-liquid
(GTL) plants in North America.
In the United States, Sasol will proceed with engineering
studies for a 96,000 barrels-per-day GTL and chemicals facility, expected to
cost $11bn-$14bn and be completed by 2019.
It will also do further studies on an integrated ethane
cracker complex there, estimated to cost up to $7bn and seen as being completed
Both estimates have gone up from previous estimates due to
changes in design and higher costs.
A GTL project in Canada will be put on hold.
Sasol shares were down 1.53% to R368.93.
"We are still long-term positive on the stock, but the
delay to the Canadian GTL is disappointing," Vestact analyst Sasha
Naryshkine said. "People want to see smooth earnings but also headway in
Sasol, which last year put on hold development of a coal-to-liquids
plant in China, said it was still in talks about divesting its 50 percent stake
in Iranian venture Arya Sasol Polymer Company. While there was uncertainty
about fair value, headline earnings per share would not be hit, it said.