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Weak rand boosts Sasol earnings

Johannesburg - Petrochemicals company Sasol reported a 14% increase in full-year earnings on Monday, boosted by higher chemical prices and a weaker rand, but the result fell short of analysts' expectations.

"The group delivered an excellent underlying business performance, coupled with a weaker rand/dollar exchange rate, as well as a progressive improvement in chemical prices," said chief financial officer Paul Victor.

Diluted headline earnings per share rose to 59.64 cents from 52.53c the previous year, below a Reuters forecast of 63.4c, based on a poll of 11 analysts.

"Taking into account our record earnings, the ongoing strength of our financial position, our future capital investment plans as well as our progressive dividend policy, we have increased our interim dividend by 1.5% to R13.50 per share, taking our full year dividend to a new record of R12.50 per share, which represents a new record for Sasol," said Victor.

He said the South African energy cluster continues to perform quite well, driving the group's profitability. "This is driven largely by better than expected production volumes from our synfuels plants, despite having the largest shut down in history. Synfuels increased its production by 2% to 7.6 million tonnes, the largest production through put in the past decade."

Watch: Sasol earnings climb on weaker rand



However, Sasol also cautioned that the economic outlook in its domestic South African base "remains challenging as the country is still recovering from a five-month long strike in the platinum sector, with business and consumer confidence levels remaining low".

It also said that rand exchange rate and oil price assumptions, the biggest external factors impacting the company's margins, could be volatile because of increased geopolitical tensions and the likelihood of rising interest rates in the world's top economies.

Sasol said it still expected a solid production performance for the 2015 financial year and forecast capital expenditure of R50bn for 2015 and R65bn for 2016.

The group also said it had obtained all the air, water and wetlands permits for its mega-projects in the southern US state of Louisiana, an ethane cracker and derivatives plant and an integrated gas-to-liquids and chemicals facility, which are expected to cost around $16bn to $21bn to build.

"We are making good progress on the financing," Sasol said.

While Sasol's synthetic fuels business remains its revenue driver, the company has increasingly diversified into chemicals and gas and clean-energy projects.

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Rand - Dollar
18.90
+0.2%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.38
+0.3%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent-ruolie
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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