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Sasol profit soars on rand, oil price

Mar 12 2012 07:58

Johannesburg - South African petrochemicals group Sasol [JSE:SOL] on Monday reported an 81% rise in first-half profit, boosted by higher oil and product prices and a weaker rand and said it was on track to deliver higher earnings for the full year.

Sasol, the world’s top maker of motor fuel from coal, said headline earnings per share for the six months to end-December jumped 81% to R23.50, at the bottom of a range of an 80% - 90% increase given in early February.

“We have maintained a resilient production performance despite challenges,” CEO David Constable said in a statement.

The average crude oil price was at $111.41 a barrel at end-December, compared with $81.68 a year earlier.

The rand/dollar exchange rate was 7% weaker than the previous period.

A stronger rand is a negative for South African exporters as it eats into profits when overseas earnings are brought home. The currency has weakened 14% against the dollar since the start of 2011.

“Our resilient operations will enable us to benefit from the favourable rand commodity prices and therefore we are well positioned to deliver increased earnings for the 2012 financial year,” it said.

“Crude oil prices have been increasing steadily supported by recent developments in supply and geopolitics in the Middle East/North Africa,” it said, but warned that the rand-dollar exchange rate remained the single biggest external factor impacting its profitability.

The company said Sasol Synfuels’ production for the full year was expected at between 7.0-7.2 million tonnes.

The forecast was revised down in November from an estimate of between 7.2-7.3 million due to a strike and other incidents which hit output.

Under new leadership since July, Sasol is investing heavily to further diversify its operations into chemicals, gas and clean energy projects, and to reduce its heavy carbon footprint.

"The macroeconomic trends, the global need for energy diversification and energy security are all supportive of our gas-to-liquids value proposition," Constable said.

The company declared an interim dividend of R5.70, up 84% on the comparison period.

Shares in the company are up 1.9% in the year to date, compared with a 5.7% rise in the JSE Top 40 - (Tradeable) [JSE:J200] blue-chip index.



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