Sasol posts solid interim results on global oil recovery

Johannesburg - Energy and chemicals group Sasol [JSE: SOL] said on Monday headline earnings per share (Heps) showed a 17% increase in the six months to end-December 2017, above market guidance on the back of a higher oil price. 

Joint president and CEO Bongani Nqwababa said Sasol’s strong set of interim financial results was largely underpinned by higher crude oil and product prices. In addition, increased demand for the group’s specialty chemical products and a solid operational performance across the value chain all contributed to the group’s steady growth.

“Our sustained focus on cost, cash and capital conservation drove a largely strong set of results, notwithstanding continued macro-economic volatility,” he said.

By early afternoon Sasol's share price was up 3.85%, trading at R409.69 on the JSE.

Executive director and chief financial officer Paul Victor said at the results announcement that ratings agency Moody’s has decoupled Sasol from South Africa’s sovereign rating, enabling it to obtain a better investment grade to attract funding.

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The petrochemical giant said Heps rose to R17.67  in the last six months, while it declared a dividend of R5.00 per share, up 4% from last year at the same time. But earnings per share (EPS) dropped by 21% to R11.29. Earnings attributable to shareholders decreased by 20% to R6.9bn from R8.7bn in the prior comparable period.

Nqwababa explained that EPS was negatively impacted by the scrapping of Sasol's US gas-to-liquids project amounting to R1.1bn (US$83m) and a partial impairment of the Canadian shale gas assets of R2.8bn (CAD281m).

Normalised operating profit for the full financial year was estimated at between R3bn and R5bn.

Sasol admitted that its sales were impacted by supply chain bottlenecks in December.

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Performance chemicals increased by 3%, with base chemicals slowing by 1%. Liquid fuel sales volumes dipped by 3%.

While the recent recovery in global oil and product prices positively impacted Sasol’s results, Nqwababa pointed out that this was offset by operational challenges at its Natref plant in Sasolburg as well as its mining operations, currency effects and poor economic conditions in South Africa.

Natref’s production volumes were down 21% owing to plant shutdowns and an unexpected Eskom electricity supply interruption at the start of the financial period.

The current buoyant mood in South Africa gave the company hope of an overall strong operational performance for its year end in June, Nqwababa said.