SASOL LIMITED: TRADING STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2024

Rhea-AI Summary

Sasol (SSL) has issued a trading statement for H1 2024, reporting significant declines in key financial metrics. The company's adjusted EBITDA is expected to decrease between 11% and 22%, falling to R22-25 billion from R28 billion in the prior period.

The company projects Earnings Per Share (EPS) to decline 47-61% to R6.00-8.00 from R15.19, while Headline Earnings Per Share (HEPS) is expected to drop 26-36% to R13.00-15.00 from R20.37.

The earnings decline is attributed to a 13% drop in average Rand per barrel Brent Crude Oil price, lower refining margins, and a 5% decrease in sales volumes. The company also reported notable non-cash adjustments, including a R6.2 billion net loss from remeasurement items and R0.1 billion in unrealised losses on monetary assets translation. These impacts were partially offset by increased chemical basket prices and cost management efforts.

Positive

• Increase in average chemicals basket prices
• Implementation of stringent cost management measures
• Efficient capital expenditure management

Negative

• Adjusted EBITDA expected to decrease 11-22% to R22-25 billion
• EPS projected to decline 47-61% to R6.00-8.00
• HEPS expected to drop 26-36% to R13.00-15.00
• 13% decline in average Rand per barrel Brent Crude Oil price
• 5% decrease in sales volumes
• R6.2 billion net loss from remeasurement items
• R0.1 billion unrealised losses on monetary assets translation
• Significant decline in refining margins and fuel price differentials

Insights

Financial Analyst

The latest trading statement from Sasol reveals concerning financial headwinds, with substantial declines across all key performance metrics. The projected 11-22% decrease in adjusted EBITDA to R22-25 billion and a steep 47-61% drop in EPS to R6.00-8.00 signal significant operational challenges.

Several critical factors warrant attention:

• The 13% decline in Rand/Brent crude prices coupled with compressed refining margins indicates structural market pressures beyond Sasol's control
• The 5% decrease in sales volumes suggests demand weakness and production constraints that could persist
• The R6.2 billion in remeasurement losses, primarily from impaired refinery assets, raises concerns about long-term asset viability

While management highlights partial offsets through higher chemical prices and cost management, these measures appear insufficient to counterbalance the broader headwinds. The continued impairment of Secunda and Sasolburg refineries suggests deeper structural challenges that may require more aggressive strategic responses.

The upcoming February 24 presentation will be important for understanding management's improvement plans, particularly regarding operational efficiency and capital allocation strategies. Investors should closely monitor the company's ability to stabilize operations and strengthen its competitive position in a challenging market environment.

JOHANNESBURG, Feb. 5, 2025 /PRNewswire/ -- In terms of paragraph 3.4(b)(i) of the Listing Requirements of the JSE Limited (JSE), a company listed on the JSE is required to publish a Trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the financial results for the next period to be reported on, will differ by at least 20% from the financial result for the previous corresponding period.

Accordingly, stakeholders are advised that, for the six months ended 31 December 2025:

• Adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA*) is expected to be between R22 billion and R25 billion compared to the prior half year adjusted EBITDA of R28 billion, representing a decrease of between 11% and 22%;
• Earnings per share (EPS) are expected to be between R6,00 and R8,00 compared to the prior half year EPS of R15,19 (representing a decrease of between 47% and 61%); and
• Headline earnings per share (HEPS) are expected to be between R13,00 and R15,00 compared to the prior half year HEPS of R20,37 (representing a decrease of between 26% and 36%); and

The decrease in earnings in the period is primarily due to:

• A 13% decline in the average Rand per barrel of Brent Crude Oil price and a significant decline in refining margins and fuel price differentials;
• ­A 5% decrease in sales volumes associated with lower production and/or lower market demand as detailed in the Production and Sales Metrics published on 23 January 2025, which can be found on our website: https://www.sasol.com/sasol-sens/production-and-sales-metrics-six-months-ended-31-december-2024;
• Notable non-cash adjustments (before taxation) including:
  • A net loss of R6,2 billion from remeasurement items compared to a net loss of R5,8 billion in the prior half year, mainly due to the Secunda and Sasolburg liquid fuels refinery cash generating units remaining fully impaired. The full amount of costs capitalised during the current period of R5,6 billion are impaired;
  • Unrealised losses of R0,1 billion on the translation of monetary assets and liabilities, and valuation of financial instruments and derivative contracts compared to unrealised gains of R2,7 billion in the prior half year.

These negative financial impacts were partially offset by an increase in average chemicals basket prices, stringent cost management and efficient capital expenditure.

The financial information underpinning this trading statement has not been reviewed and reported on by the Company's external auditors.

Sasol remains focused on improving the performance of the business and will present its 2025 interim financial results, including more detail on improvement plans, on Monday, 24 February 2025 at 09h00 (SA time). This will be followed by a market call, hosted by President and Chief Executive Officer, Simon Baloyi, and Chief Financial Officer, Walt Bruns, to address questions.

Please connect to the call via the webcast link: https://www.corpcam.com/Sasol24022025 or via teleconference call link: https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=8853546&linkSecurityString=26eaaf0156

* Adjusted EBITDA is calculated by adjusting operating profit for depreciation, amortisation, share-based payments, remeasurement items, change in discount rates of our rehabilitation provisions, all unrealised translation gains and losses, and all unrealised gains and losses on our derivatives and hedging activities.

Adjusted EBITDA is not a defined term under International Financial Reporting Standards and may not be comparable with similarly titled measures reported by other companies. The aforementioned adjustments are the responsibility of the directors of Sasol. The adjustments have been prepared for illustrative purposes only and due to their nature, may not fairly present Sasol´s financial position, changes in equity, results of operations or cash flows.

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

Disclaimer - Forward-looking statements

Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, expectations, developments, and business strategies. Examples of such forward-looking statements include, but are not limited to, the capital cost of our projects and the timing of project milestones; our ability to obtain financing to meet the funding requirements of our capital investment programme, as well as to fund our ongoing business activities and to pay dividends; statements regarding our future results of operations and financial condition, and regarding future economic performance including cost containment, cash conservation programmes and business optimisation initiatives; recent and proposed accounting pronouncements and their impact on our future results of operations and financial condition; our business strategy, performance outlook, plans, objectives or goals; statements regarding future competition, volume growth and changes in market share in the industries and markets for our products; our existing or anticipated investments, acquisitions of new businesses or the disposal of existing businesses, including estimates or projection of internal rates of return and future profitability; our estimated oil, gas and coal reserves; the probable future outcome of litigation, legislative, regulatory and fiscal developments, including statements regarding our ability to comply with future laws and regulations; future fluctuations in refining margins and crude oil, natural gas and petroleum and chemical product prices; the demand, pricing and cyclicality of oil, gas and petrochemical product prices; changes in the fuel and gas pricing mechanisms in South Africa and their effects on prices, our operating results and profitability; statements regarding future fluctuations in exchange and interest rates and changes in credit ratings; total shareholder return; our current or future products and anticipated customer demand for these products; assumptions relating to macroeconomics; climate change impacts and our climate change strategies, our development of sustainability within our businesses, our energy efficiency improvement, carbon and greenhouse gas emission reduction targets, our net zero carbon emissions ambition and future low-carbon initiatives, including relating to green hydrogen and sustainable aviation fuel; our estimated carbon tax liability; cyber security; and statements of assumptions underlying such statements. Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavour", "target", "forecast" and "project" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors and others are discussed more fully in our most recent annual report on Form 20-F filed on 6 September 2024 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider foregoing factors and other uncertainties and events, and you should not place undue reliance on forward-looking statements. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

 

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SOURCE Sasol Limited

FAQ

What is Sasol's (SSL) expected EBITDA for H1 2024?

Sasol's adjusted EBITDA for H1 2024 is expected to be between R22 billion and R25 billion, representing a decrease of 11-22% compared to R28 billion in the prior period.

How much did SSL's Earnings Per Share decline in H1 2024?

Sasol's EPS is expected to decline by 47-61%, falling to between R6.00 and R8.00 compared to R15.19 in the prior half year.

What factors caused Sasol's (SSL) earnings decline in H1 2024?

The main factors were a 13% decline in Brent Crude Oil prices, lower refining margins, a 5% decrease in sales volumes, and significant non-cash adjustments including R6.2 billion in remeasurement losses.

When will Sasol (SSL) release its full H1 2024 financial results?

Sasol will present its 2025 interim financial results on Monday, February 24, 2025, at 09:00 SA time.

What is the expected Headline Earnings Per Share (HEPS) for Sasol (SSL) in H1 2024?

Sasol's HEPS is expected to be between R13.00 and R15.00, representing a decrease of 26-36% compared to R20.37 in the prior half year.