Rand, oil price to dent Sasol

Johannesburg - Sasol [JSE:SOL], the world's largest fuel from coal producer, on Friday advised that it expected its first half earnings per share (EPS) and headline earnings per share (HEPS) to decrease by at least 45% compared to the prior comparable period.

The expected decrease in earnings was mainly due to the significant strengthening of the rand against the US dollar and a decrease in average crude oil and product prices compared to the corresponding six months of the previous reporting period.

HEPS for the first half of the 2009 financial year were at a record high.

In addition, the average oil price achieved during the prior year comparable period was positively impacted by the effect of oil hedges, which resulted in a net gain of approximately R5bn.

The company had warned that its results might be further impacted by the potential change in volume variances and the impact of a stronger rand on closing financial assets and liabilities, as well as any adjustments resulting from the half year-end closure process.

Volatile market conditions, at the time, precluded the group from providing a more precise indication of the range of the earnings decline expected.

But following completion of the half-year closure process, Sasol said it can now indicate that the reduction in EPS and HEPS is expected to be between 50% and 55%.

"It is emphasised that, as per our previous statement, this trading update deals only with the first half of the 2009 financial year comparison. The very low earnings base of the second half of the 2009 financial year will strongly influence a comparison of the full 2010 financial year's results with 2009 and guidance in this regard will be given in due course," Sasol said in a statement to the JSE.

Sasol's interim results for the six months to end December 2009 will be released on March 8.

- I-Net Bridge