Sasol delivers duration in-between earnings in volatile environment

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Sasol’s efficiency for the first six months of 2024 continued to be negatively impacted by the ongoing volatile macroeconomic environment, with weaker oil and petrochemical costs, unstable product demand and continued inflationary stress. Despite some operational enhancements in South Africa, persistent underperformance of the screech-owned enterprises obsessed with Sasol’s price chain and the weaker world boost outlook proceed to impact Sasol’s industrial efficiency.

Earnings of R136,3 billion is lower than the prior duration of R149,8 billion, essentially due to the lower chemical product costs across all regions. Earnings earlier than passion and tax (EBIT) of R15,9 billion is R8,3 billion (34%) lower than the prior duration. The variance to the prior duration is essentially because of lower income and lower beneficial properties on the valuation of monetary devices and derivative contracts, offset by lower chemical feedstock costs in Europe, Asia and the united states of The United States (US).

The present duration contains remeasurement items of R5,8 billion essentially because of:

• Impairments of the Secunda liquid fuels refinery cash producing unit (CGU) of R3,9 billion driven by an additional deterioration assumed of the macroeconomic outlook, including Brent crude oil and electricity costs, ensuing in the plump amount of capital expenditure incurred right by the duration being impaired; and
• Impairments of the Chemical substances Africa Chlor-Alkali & PVC and Polyethylene CGUs of R1,2 billion because of lower promoting costs connected to diminished market demand.

The prior duration included impairments of R6,4 billion essentially due to the Secunda liquid fuels refinery CGU (R8,1 billion), Chemical substances SA Wax CGU (R0,9 billion), China Crucial Care Chemical substances CGU (R0,9 billion), offset by a reversal of the US Tetramerisation CGU impairment (R3,6 billion).

The Strength industrial, including Mining, EBIT increased by 22% to R12,9 billion in comparison to the prior duration with every sessions impacted by remeasurement items. Except for remeasurement items, EBIT decreased by 10% because of lower export coal costs, increased exterior coal purchases to fortify Secunda Operations (SO) coal requirements and increased repairs and electricity expenditure. Improved manufacturing at SO, better refining margins, increased export coal gross sales volumes and the weaker substitute price in part offset this.

EBIT for the Chemical substances industrial decreased by 93% to R0,7 billion, in comparison to the EBIT of R9,6 billion in the prior duration with every the present and prior sessions impacted by remeasurement items. Except for remeasurement items, EBIT decreased by 68% in comparison to the prior duration with margins and associated profitability under stress because of not easy market prerequisites.

These prerequisites included macroeconomic weak point particularly in China and Europe and continued buyer destocking which negatively impacted demand. The common gross sales basket ticket for the first half of 2024 (H1 FY24) became as soon as 24% lower than the first half of 2023 (H1 FY23), driven by a aggregate of lower oil, feedstock and energy costs and feeble market demand. Despite these continued market headwinds, H1 FY24 total chemical substances gross sales volumes had been 4% increased than H1 FY23, largely because of increased ethylene and polyethene gross sales in the US, improved manufacturing and present chain efficiency in Africa offset by continued lower demand in Eurasia.

Core HEPS decreased from R24,55 per fragment in the prior duration to R18,39 per fragment. The lower in Core HEPS is due to the abovementioned decline in EBIT.

At 31 December 2023, our total debt became as soon as R124,1 billion (US$6,8 billion) in comparison to R124,3 billion (US$6,6 billion) at 30 June 2023. Within the course of the reporting duration, Sasol issued R2,4 billion in the native debt market under the home medium-term indicate (DMTN) programme. The US$1,5 billion (R27,5 billion) bond can be repaid in March 2024.

Money generated by working activities decreased by 31% to R14,7 billion in comparison to the prior duration in accordance to the lower in EBIT and the circulation in working capital. Capital expenditure, except for circulation in capital project connected payables, amounted to R15,9 billion in comparison to R15,6 billion right by the prior duration. Capital expenditure relates essentially to Secunda shutdown activities, the Mozambique drilling advertising and marketing campaign and continued utilize on Synfuels renewal and environmental compliance activities.

Furthermore be taught:

• Sasol delivers on steerage despite ongoing headwinds
• Sasol duration in-between earnings up 9%, mixed earnings efficiency
• Sasol’s comeback confirmed in FY22’s numbers – 20-bagger does a Lazarus since despair of March 2020

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