- For the Group, FY2028 Adjusted EBITDA of up to R71 billion, Net Debt (excluding leases) target and dividend trigger below US$3 billion supported by operational improvements, cost and capital savings
- Sasol has expanded its renewable energy ambition to more than 2GW, from an initial 1,2GW, to displace coal-based electricity and generate competitive returns.
- GHG emissions reduction target to remain 30% by 2030 through value accretive Emissions Reduction Roadmap.
- Opportunities to preserve and grow value of gas business.
Strengthen the Foundation
Sasol’s foundation business comprises the International Chemicals and Southern Africa Energy and Chemicals businesses.
The Southern Africa Energy and Chemicals business serves as a cornerstone. The value chain comprises coal, natural gas, liquid fuels and chemicals operations that support approximately 1,4 million jobs in South Africa taking into consideration the ecosystem of suppliers, and customers in more than 100 countries supplying about 400 retail sites. Sasol contributes 5% to South Africa’s GDP.
Here, the priorities to improve performance includes addressing coal quality in Mining and operational performance improvement of Secunda Operations:
1. Improve coal quality and volumes cost competitively
As Sasol’s Mining operations have expanded, operations encountered complex geology that has compromised coal feedstock quality, which resulted in reduced gas yield at Secunda Operation’s gasification plant (i.e., less gas per gasifier). The poorer coal quality has led to damaged equipment leading to longer downtimes, resulting in fewer gasifiers available for production.
Following extensive assessments and diagnostic work, coal quality will be restored through technical interventions that include destoning to remove sinks, real-time quality monitoring and coal blending management.
Sasol Mining is resetting selected Mining fundamentals, including coal reserve interpretation. With an improved understanding of the geology, Mining can ensure proactive planning and execution of mine plans, thereby creating deployment flexibility at sections. Volumes will be enhanced by utilising coal from the Thubelisha colliery for Secunda Operations, while maximising internal low cost supply to improve operating efficiencies and unlock additional capacity. External purchases will continue to optimise the coal blend, at the lowest cost of coal at the most optimal quality. Sasol will target a breakeven oil price of US$50/bbl by FY2028.
2. Restore gasification performance
With the destoning project coming online in December 2025, there will be an immediate and measurable increase in gasifier yield. This, together with a number of other maintenance interventions, and additional resources, will result in a reduction in gasifier outage time and enable ramp-up of Secunda Operations production volumes to more than 7,4 million tons by FY2028. This will close the 9% volume gap, where volume performance is currently at 91%.
Sasol’s International Chemicals business has a presence spanning 12 countries delivering innovative solutions through unique chemistry to over 4 000 customers across 88 countries.
To restore International Chemicals to industry peer and Sasol’s historic performance levels, the implementation of self-help measures to strengthen this business commenced in FY2025. This has already resulted in almost doubling of the EBITDA from H1 2024 to H1 2025. These self-help measures include adjusting its Go-To-Market approach, optimising assets and costs.
To maximise margins over scale, International Chemicals has adopted a “value-driven” approach instead of a “volume-driven” approach. The asset portfolio continues to be under review to maximise value with decisions made to close or mothball four assets across Italy, Germany and the USA to date. These have been as a result of weak market demand, global market overcapacity or some assets not aligned to strategic priorities.
Sasol’s International Chemicals business has assets geographically close to key markets and is positioned to meet the needs of multiple markets. This foundation, coupled with management actions and market recovery, the International Chemicals portfolio will be a US$750 to 850 million EBITDA business by FY2028, achieving more than a 15% EBITDA margin through the cycle. Stronger cashflow will enable the business service the US dollar denominated debt.
Grow and Transform
As the global energy transition progresses, South Africa is already undergoing a transformation in the energy sector as the energy mix is being diversified, market reforms implemented and a favourable regulatory environment created.
Keeping 30% GHG reduction by 2030 target intact and creating value
Our emission reduction roadmap has been optimised and is a catalyst for our growth and transformation. The optimised ERR is still allowing us to meet our compliance obligations, reach our decarbonisation targets and maintain higher production levels as long as possible. Capital for the ERR has been further optimised to R4 to 7 billion.
Expanding renewable energy ambition
Simultaneously, Sasol has expanded its renewable energy ambition to more than 2GW, from an initial 1,2GW, to displace coal-based electricity and generate competitive returns. The company has secured 757MW of renewable energy to date. Sasol has established an integrated power business that will supply green electrons to the South African market and meet the company’s own power demand.
Oddly, Sasol announced earlier in the week that it would be selling some its clean wind energy to Discovery Green in a wheeling arrangement. Read more
Sustaining gas supply and market growth
As southern Mozambique gas declines, this will be bridged with near field extensions to FY2028 and methane rich gas (MRG) to FY2030. After which South Africa has to transition to LNG. Sasol has partnered with Eskom to develop a gas to power solution to provide sufficient demand certainty for LNG.
Asset transformation and growing sustainable feedstocks
Sasol continues to explore various options to produce sustainable fuels and chemicals in the future through its unique technologies, assets and capabilities. This will be done in line with customer demand.
Robust Financial Framework
Sasol’s strategy is supported by a robust financial framework. The framework focuses on four priorities including improving sustainable free cash flow, deleveraging the balance sheet, reinstating dividends and disciplined capital allocation. These priorities are underpinned by proactive risk management, ensuring that they respond to changes in the operating environment to mitigate risks and accelerate opportunities.
Enabled by operational improvements and business performance, Sasol is targeting nominal EBITDA of between R64 to 71 billion by FY2028. This is informed by the assumed macro-economic assumptions and delivering controllable elements.
The company has made progress in maintaining cost increases below inflation, which is already yielding significant impact on margins and cash generation this year. Through key levers, Sasol will continue to optimise its cost base and hold it largely flat in nominal terms, and deliver savings of R10 to 15 billion by FY2028.
The capital allocation framework sets out the principles to guide allocation of capital that creates sustainable value for all its stakeholders.
The first order Maintain capital allocation is directed to ensure safe, compliant and reliable operations. The company is targeting R23 to 31 billion per annum in nominal terms, over the
next 3 years. This equates to R5 to R6 billion per annum lower than the previously guided capital range and equal to R15 to R20 billion in cumulative savings over the next 3 years. In addition to maintain capital, an allocation of R1 billion in FY2026 and R2 billion from FY2027 onwards has been included in the first order allocation for selective growth and transformation projects.
The company is prioritising debt reduction with a net debt, excluding leases, target of sustainably below US$3 billion. Only once this threshold is sustainably achieved will Sasol consider reinstating dividends at 30% of free cash flow. The allocation of second order capital will follow with options to further reduce debt reduction, make larger value-accretive investments in growth and transform and/or return additional capital to shareholders.
To manage ongoing macro-economic volatility, Sasol has a strong liquidity position of approximately US$3 billion that includes a healthy cash buffer, unutilised facilities and no immediate debt maturities. Further, it maintains a proactive hedging programme for both oil price and the Rand/Dollar exchange rate, which looks more than 12 months ahead. Sasol has completed this programme for FY2025 and more than 90% complete for FY2026, while increasing the hedge cover ratio.
Change in dividend policy
The Sasol Limited Board of Directors has approved a revision to the company’s dividend policy.
Previously, Sasol’s dividend policy included a dividend trigger based on achieving a sustainable net debt level below US$4 billion. The Board has approved the adjustment to the dividend trigger to a more conservative threshold of net debt sustainably below US$3 billion.
This revised policy is considered a prudent step, better aligned with the prevailing volatility in the macro-economic environment and Sasol’s commitment to maintaining a resilient balance sheet and ensuring sustainable future shareholder returns.
“Having established a proud, pioneering legacy of 75 years, we are fundamentally reshaping Sasol’s business to be a sustainable energy and chemicals producer well into the future. We are strengthening our foundation to deliver value and positioning the company for sustainable growth. We have the expertise, assets and unique capabilities that position us well for long-term growth and be a force for good. Team Sasol is fully committed to delivering on our promises and building credibility through our performance,” said Simon Baloyi, Sasol President and Chief Executive Officer.
The market has reacted well to the news
Image credit: JSE
Author: Bryan Groenendaal
Content source: Sasol
