Sasol informed its shareholders yesterday that its annual earnings are expected to drop by between 74% and 84% due to the volatile market and higher costs.
In its trading statement for the year ended June 30, 2023, the synthetic fuels and chemicals producer said it expected basic earnings per share (EPS) to be between R10.26 and R16.40, compared to the prior year’s EPS of R62.34.
Headline earnings per share (HEPS) were likely to be between R49.47 and R56.13, compared to the prior year’s figure of R47.58, representing an improvement of between 4% and 18%.
Sasol said it expected to report a 2% to 16% year-on-year decrease in adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) to between R60.6 billion and R70.6n for the financial year ended June 30.
Sasol said its financial results for the reported period were affected by a combination of operational challenges and a volatile global economic landscape that included weaker global economic growth, higher inflation, depressed chemicals prices, and higher feedstock and energy costs.
“The softening of the Brent crude oil price and refining margins in the latter part of the 2023 financial year was offset by a weakening of the rand/US dollar exchange rate.
“Chemicals basket prices were on a declining trend during 2023, and while we have seen some respite in lower feedstock and energy prices, gross margin and global demand remains depressed, particularly in our American and Eurasian operations,” it said.
Its business performance was further impacted by the under-performance of state-owned enterprises in South Africa, which had constrained supply chains and resultant sales volumes.
Further, a notable improvement in Sasol’s operational performance was realised in the second half of the financial year, underpinned by focused mitigation plans to address the production instabilities experienced earlier in the year.
Sasol reported a full impairment of the Secunda liquid fuels plant of R35.3bn as a result of cost assumptions and a revised production profile based on its emission reduction plan.
Earlier this month, Sasol submitted an appeal to the Minister of Forestry, Fisheries and the Environment, Barbara Creecy, to change the methodology used to measure its emissions.
This comes after the National Air Quality Officer last month declined its application to be regulated on an alternative emission load basis for the sulphur dioxide (SO₂) emissions from the boilers at its Secunda operations’ steam plants from April 1, 2025 onwards.
Sasol will release its 2023 financial results on August 23.
BUSINESS REPORT