SASOL LIMITED: PRODUCTION AND SALES METRICS FOR THE NINE MONTHS ENDED 31 MARCH 2025

Rhea-AI Summary

Sasol (SSL) has released its production and sales metrics for the nine months ended March 31, 2025, revealing ongoing margin pressures due to global macro-economic challenges. The company's Southern Africa operations face coal quality issues at Secunda Operations, leading to a strategic reduction in coal production by ~2mt in favor of higher quality purchased coal. The destoning project remains on track for H1 FY26 completion, with costs under R1 billion.

Production disruptions occurred due to a fire incident at Natref and an unplanned outage at Secunda Operations in Q3 FY25. International Chemicals revenue increased in Q3 FY25, despite lower sales volumes due to operational outages in America. The company completed its exit from the US Phenolics business in March 2025 and received renewed atmospheric emissions licenses for key operations.

Financial guidance for FY25 remains largely unchanged, with cash fixed costs expected to stay below inflation and capital expenditure projected at the lower end of R28-R30 billion range. Mining production outlook has been revised to 28-30 mt, with costs between R650-R670 per ton.

Positive

• International Chemicals revenue increased in Q3 FY25 due to higher average prices
• EBITDA improved compared to prior year through proactive management initiatives
• Renewed atmospheric emissions licenses obtained for key operations
• Carbon tax policy environment more supportive with 60% basic tax-free allowance retained until 2030
• Strong liquidity position maintained with strict cost management

Negative

• Margins facing pressure due to global macro-economic challenges
• Coal quality issues forcing 2mt reduction in own production and increased purchasing of external coal
• Production disruptions from Natref fire incident and Secunda Operations outage
• Fuels sales volumes expected to decrease 1-3% compared to FY24
• Mining production outlook revised downward to 28-30 mt
• International Chemicals sales volumes declining due to operational outages

Insights

Financial Analyst

Sasol faces ongoing operational challenges and reduced production targets, with measures in place to maintain financial stability amid external pressures.

Sasol's Q3 FY25 performance reveals a company navigating significant operational headwinds while implementing strategic countermeasures. The coal quality issues at Secunda Operations represent a material challenge, forcing management to reduce internal coal production by approximately 2 million tons and substitute with higher-quality purchased coal. This decision creates a dual financial impact: increased input costs and reduced production volumes across both fuels and chemicals segments.

The company's decision to exit the US Phenolics business in March 2025 signals a deliberate portfolio optimization strategy aimed at improving margins within the International Chemicals segment. While International Chemicals revenue increased quarter-over-quarter due to higher pricing in America and Eurasia, operational outages in America have hampered sales volumes. The unplanned Louisiana Integrated Polyethylene cracker outage presents additional headwinds.

From a financial perspective, Sasol has maintained its hedging program to protect its balance sheet, securing Brent crude oil floor prices of approximately $64/bbl for Q4 FY25 and $60/bbl for FY26. This prudent risk management approach provides downside protection against oil price volatility.

The revised guidance is particularly telling. Mining production targets have been lowered to 28-30 million tons, with associated cost increases to R650-R670 per ton. Fuels sales volumes are projected 1-3% lower than FY24, with Chemicals Africa volumes 2-4% lower. International Chemicals volumes will likely hit the lower end of the previously guided 4-8% decrease. Despite these challenges, management maintains that cash fixed costs will increase below inflation, while capital expenditure will land at the lower end of the R28-30 billion range, demonstrating financial discipline.

Energy Industry Specialist

Sasol's operational disruptions and coal quality issues are offset by proactive management and favorable regulatory developments.

Sasol's operational performance reveals the complex challenges facing integrated energy and chemicals producers in the current environment. The persistent coal quality issues at Secunda Operations represent a critical operational constraint that has forced a ~2mt reduction in internal coal production. While the R1 billion destoning project remains on schedule for H1 FY26 completion, the interim solution of purchasing higher-quality coal will compress margins in the near term.

The January 2025 fire incident at Natref and subsequent delayed production ramp-up, coupled with an unplanned outage at Secunda Operations in Q3, have created a cascading effect through the value chain, impacting both fuels and chemicals production volumes. These disruptions highlight the vulnerability of integrated operations to single-point failures.

On the regulatory front, the renewal of atmospheric emissions licenses for both Secunda Operations and Natref represents a crucial operational continuity milestone. Moreover, South Africa's National Treasury's decision to retain the 60% basic tax-free carbon allowance until at least 2030 creates a more stable regulatory environment for capital planning and energy transition investments.

The potential impact of US import tariff changes, despite the 90-day suspension announced on April 9, introduces additional uncertainty. Sasol's response, focusing on supply chain resilience and identifying potential opportunities, demonstrates adaptive management.

The maintained guidance for Gas, Oryx, Secunda Operations, and Natref operations suggests that despite localized challenges, the broader operational backbone remains stable. The ongoing hedging program with floors of $64/bbl for Q4 FY25 and $60/bbl for FY26 provides important downside protection during this period of operational adjustments and external market uncertainty.

JOHANNESBURG, April 17, 2025 /PRNewswire/ -- Sasol has published its production and sales performance metrics for the nine months ended 31 March 2025 on the Company´s website at www.sasol.com, under the Investor Centre section: https://www.sasol.com/investor-centre/financial-results.

Business performance

Our margins continue to face pressure due to the prevailing global macro-economic pressures and geopolitical uncertainties. We continue to implement self-help measures across the business which have protected free cash flow.

In the Southern Africa Energy and Chemicals business, coal quality continues to impact Secunda Operations (SO). The destoning project to improve the quality of coal is progressing well and remains on track for completion in H1 FY26, within the previously communicated cost of less than R1 billion. However, to support gasifier effectiveness for the period until the destoning plant is in beneficial operation, a management decision was taken to reduce own coal production by a further ~2mt and replace it with higher quality purchased coal, which contains lower sinks. Natref experienced a delay in the production ramp up post the fire incident in January 2025. This delay, as well as an unplanned operational outage at SO in Q3 FY25 impacted production and consequently fuels and South African chemicals sales volumes.

Revenue in International Chemicals increased in Q3 FY25 compared to the previous quarter, mainly driven by higher average prices in both America and Eurasia. However, sales volumes declined, largely due to operational outages in America. While the business environment remains challenging, EBITDA has improved as a result of proactive management initiatives compared to the prior year.

Business updates

In February 2025, we received the renewed atmospheric emissions licenses (AELs) for SO. The AEL includes the required variation to reflect the appeal decision related to sulphur emissions from the steam plant boilers. We also received the renewed AEL for Natref, effective 1 April 2025.

In March 2025, National Treasury published the 2025 Budget Review, signaling a more supportive carbon tax policy environment for South Africa. Notably, the retention of the 60% basic tax-free allowance until at least 2030 (versus the previously proposed step-down from 2026) reflects a constructive shift that supports investment certainty and South Africa's energy transition goals.

Sasol exited the US Phenolics business in March 2025 as part of our ongoing asset optimisation initiative aimed at improving margins and longer-term competitiveness of the International Chemicals business. Shutdown and decommissioning activities of both the Greens Bayou and Winnie sites in Texas are expected to begin later in CY25.

Outlook

On 3 April 2025, the US government announced changes to US import tariffs, followed by a suspension of these tariffs for most countries for 90 days, announced on 9 April 2025. As global markets continue to adjust to the recent tariff changes, we are actively assessing the potential impact on our operations, supply chain, and pricing strategies. Engagements with the relevant stakeholders are ongoing and we remain focused on ensuring continuity, mitigating potential disruptions and identifying any upside opportunities for Sasol. We continue to maintain strong liquidity and strict cost management, which supports our ability to navigate external uncertainties.

Our ongoing hedging programme aims to ensure downside protection of the balance sheet. To date, the FY25 hedging programme is now complete, while the FY26 programme is nearing completion, with only Q4 FY26 oil hedges still open. The average Brent crude oil floor price for Q4 FY25 is ~US$64/bbl, with FY26 hedge floors averaging ~US$60/bbl. Please refer to the hedging update on the last page.

Market guidance for Gas, Oryx, SO and Natref remains intact. Aligned with the management decision taken to reduce own production of poor quality coal and replace it with higher quality external purchases, Mining's production outlook has been revised downward to 28 - 30 mt. The associated mining cost per ton is now expected to range between R650 - R670 per ton. Fuels sales volumes are expected to decrease to 1 - 3% lower than FY24 largely due to the supply disruptions. Chemicals Africa sales volumes are also projected to be 2 - 4% lower than FY24, driven by lower SO production and the uncertainty surrounding ongoing global tariff disputes.

International Chemicals sales volumes are expected to be at the lower end of our previous guidance, which indicated a 4 - 8% decrease compared to FY24. This is primarily due to the unplanned Louisiana Integrated Polyethylene LLC (LIP) JV cracker outage in the US and the uncertainty surrounding ongoing global tariff disputes.

Financial metrics for FY25 remain broadly in line with guidance. Cash fixed cost increase is expected to remain below inflation and capital expenditure to be at the lower end of our guided range of R28 - R30 billion.

For further information, please contact:
Sasol Investor Relations,
Tiffany Sydow, VP Investor Relations
Telephone: +27 (0) 71 673 1929
investor.relations@sasol.com

 

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SOURCE Sasol Limited

FAQ

What caused Sasol's (SSL) production decline in Q3 FY25?

Production declined due to a fire incident at Natref, an unplanned operational outage at Secunda Operations, and coal quality issues requiring reduced own coal production by ~2mt.

How much will Sasol's (SSL) destoning project cost and when will it complete?

The destoning project will cost less than R1 billion and is scheduled for completion in H1 FY26.

What is Sasol's (SSL) revised mining production outlook for FY25?

Mining production outlook has been revised downward to 28-30 mt, with mining costs expected between R650-R670 per ton.

What are Sasol's (SSL) hedging positions for FY25 and FY26?

FY25 hedging is complete with Q4 Brent crude oil floor price at ~US$64/bbl, while FY26 hedges average ~US$60/bbl with only Q4 FY26 oil hedges still open.

How will Sasol's (SSL) chemicals sales volumes be affected in FY25?

Chemicals Africa sales volumes are projected 2-4% lower than FY24, while International Chemicals sales volumes are expected to decrease 4-8% compared to FY24.