Sasol Stock Price, News & Analysis

Sasol and the Central Energy Fund (CEF) have reached a memorandum of understanding to enhance gas solutions in South Africa. This partnership aims to secure domestic energy supply and foster job creation through a just energy transition. Gas is critical to the country's energy mix and both companies will focus on future supply options and necessary infrastructure. Currently, gas supply is mainly from Mozambique, and there is a need for additional sources as reserves mature. The collaboration aims to explore various low-cost gas import locations and develop the Southern African natural gas market.

Sasol reported a significant recovery in earnings for the fiscal year ended 30 June 2021, with EBIT of R16.6 billion, surpassing the previous year's loss of R111.9 billion. Despite challenges from COVID-19 and adverse weather, the company benefitted from increased Brent crude oil and chemicals prices. Key metrics include adjusted EBITDA of R48.4 billion, headline earnings per share at R39.53, and a reduction in total debt to R102.9 billion. The company's liquidity remains robust at R84 billion, while it has opted not to declare dividends amid macroeconomic uncertainty.

Sasol's trading statement for the year ending June 30, 2021, shows significant recovery with earnings per share (EPS) projected between R12.00 and R18.00, a turnaround from a loss of R148.49 the previous year. Headline earnings per share (HEPS) are expected between R39.00 and R41.00, indicating over 100% improvement. Adjusted EBITDA is forecasted to rise by 32% to 49% to R46 billion to R52 billion, driven by stronger chemical prices and effective cost management. However, weather-related disruptions in the US impacted production by 300kt.

Sasol reported production and sales metrics for the year ended 30 June 2021, highlighting a resilient performance despite challenges. Chemical volumes decreased due to divestments and adverse weather, yet higher chemical prices led to increased revenue. The Energy sector benefited from recovering demand post-lockdowns and rising oil prices. The company is currently closing its financial year and plans to release its annual results on 16 August 2021. Investors can expect a Trading Statement in early August, detailing performance metrics further.

Sasol Limited and the Industrial Development Corporation of South Africa have signed a memorandum of cooperation to advance South Africa's green hydrogen economy. The MOC aims to leverage the country's renewable resources and Sasol's technology to become a leader in the global hydrogen market. Both entities will collaborate on policy advocacy, developing pilot and commercial hydrogen projects, and securing financing. Sasol's leadership in creating hydrogen ecosystems could generate sustainable energy products and job opportunities, supporting the nation's energy transition and economic growth.

On July 1, 2021, Sasol Limited announced the resignation of Chief Financial Officer (CFO) Paul Victor, effective June 30, 2022. He will assist during a six-month transition period to facilitate the handover of responsibilities. Mr. Hanré Rossouw, currently CFO of Royal Bafokeng Platinum, will succeed Victor as CFO and executive director on July 1, 2022, after joining the company on April 4, 2022. Rossouw brings extensive experience in debt restructuring and corporate finance, enhancing Sasol’s leadership during upcoming business challenges.

Sasol announced the approval from the Competition Tribunal for the sale of its Air Separation Units (ASUs) to Air Liquide. This approval fulfills the last condition for the transaction, which is expected to close within 10 business days. The deal, worth R5.525 billion and EUR148.75 million, will help Sasol reduce debt. Several commitments were made regarding joint renewable power procurement and economic empowerment. The financial implications will be detailed in Sasol's 2021 annual report.

Sasol has made strides in reducing its debt following a strong operational performance, supported by favorable macroeconomic conditions and cash conservation efforts. The company aims to lower debt levels further, potentially reinstating dividend payments. Sasol has restructured its hedging program, raising the floor oil price from US$43.11 to approximately US$60.09 per barrel, while providing a cap at about US$71.97 per barrel. The hedge cover ratio has increased to 90%, covering 24 million barrels for the financial year 2022, enhancing financial stability despite ongoing oil price volatility.

Sasol South Africa Ltd has signed a sale agreement to divest a 30% interest in the Republic of Mozambique Pipeline Investments Company (ROMPCO) for an initial consideration of R4.145 billion and potential deferred payments up to R1 billion by June 30, 2024. Post-transaction, Sasol will retain 20% ownership of ROMPCO and continue its operations under existing agreements. This divestment aligns with Sasol's strategic plan while reaffirming its commitment to Mozambique's gas sector.