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Sasol reported a 20 percent drop in headline earnings as favourable market conditions and higher gross margins were offset by operational challenges at the group’s Secunda plant.
Sasol, a producer of synthetic fuels and chemicals, on Monday reported headline earnings had dropped to R9.49 billion for the six months ended in December compared with R11.85 billion reported for the comparative period in 2020.
Earnings before interest and tax was 12 percent higher at R24.3 billion. The group’s gross margins had improved in line with macroeconomic conditions. Despite uncertainty, there are now “clear signs of recovery to pre-pandemic levels”, Sasol CEO Fleetwood Grobler said in a pre-recorded presentation.
Lower production out of the South African operations was however “disappointing”, Grobler said. This is owed to a coal production shortfall at Sasol mines where a series of incidents in the final quarter of 2021 hit production targets.
While delivering value to shareholders is a key focus for Sasol, the group’s board decided it was not prudent to declare an interim dividend. The dividend will be restored “when we are sure we can do so on a stainable basis” said Grobler who notes a few asset disposals are yet to be concluded while awaiting regulatory approvals.
Sasol embarked on an aggressive cost savings and asset disposal programme in 2020 when the impacts of the Covid-19 pandemic hit the group’s balance sheet which was already stretched from its troubled Lake Charles Chemicals Project in Louisiana.
At 31 December 2021, Sasol’s total debt was R109.2 billion compared to R102.9 billion at 30 June 2021. Its gearing has reduced to 59.1 percent from 61.5 percent at 30 June 2021, mainly due to stronger cash earnings generation, but offset by the weaker closing exchange rate.
The group reported five fatalities for the half-year, causing “grave concern” about the deterioration of the group’s safety performance, Grobler said, adding that Sasol was redoubling its efforts with focused interventions hoped to turn the tide.
In terms of the group’s environmental objectives, a transition to gas feedstock remains a significant lever for Sasol’s de-carbonisation.
“To this end we are making good progress in the purchasing of approximately 40 to 60 petajoules of liquefied natural gas and expect financial close in the calendar year 2022,” Sasol said. -news24.com
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