- Sasol say their poor financial performance for the six months ended 31 December 2024 was impacted by a challenging macroeconomic and operating environment.
- Revenue of R122,1 billion is 10% lower than the prior period, mainly due to a 13% decline in the average Rand per barrel Brent crude oil price and a significant decline in refining margins and fuel price differentials, as well as a 5% decrease in sales volumes as a result of lower production and lower market demand.
Sasol earnings snapshot
- Basic earnings per share (EPS) down 52% to R7,22 per share
- Headline earnings per share (HEPS) 31% lower to R14,13 per share
- Cash generated by operating activities up 20% to R17,6 billion
- Adjusted EBITDA down 15% to R23,9 billion
- Net debt at R81,8 billion (US$4,3 billion) from R73,7 billion (US$4,1 billion) at 30 June 2024
Adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) of R23,9 billion is 15% lower mainly as a result of the aforementioned lower revenue with stringent cost management implemented in response helping to mitigate the impact. The relative contribution from International Chemicals increased from 6% to 13%.
Earnings before interest and tax (EBIT) is 40% lower to R9,5 billion. This was impacted by non-cash adjustments including:
- A net loss of R6,2 billion from remeasurement items compared to a net loss of R5,8 billion in the prior period, mainly due to further impairments of the Secunda liquid fuels refinery cash generating unit (CGU) of R5,0 billion and the Sasolburg liquid fuels refinery CGU of R0,6 billion. Both CGUs remain fully impaired, resulting in amounts capitalised during the current period being 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 period.
As a result of the above, basic earnings per share (EPS) decreased by 52% to R7,22 per share and Headline earnings per share (HEPS) decreased by 31% to R14,13 per share compared to the prior period.
Cash generated by operating activities increased by 20% to R17,6 billion compared to the prior period mainly due to changes in working capital. Capital expenditure, excluding movement in capital project related payables, amounted to R15,0 billion, 6% lower than the prior period.
At 31 December 2024, our total debt was R116,9 billion (US$6,2 billion) compared to R117,7 billion (US$6,5 billion) at 30 June 2024. Sasol deposited R5,4 billion (US$0,3 billion) on the Revolving credit facility during the current period. The company’s net debt (excluding leases) was R81,8 billion (US$4,3 billion) compared to R73,7 billion (US$4,1 billion) at 30 June 2024 with the increase due to the aforementioned negative free cash flow.
Simon Baloyi – Chief Executive Officer of Sasol. Image credit: Sasol
Carbon emissions
Sasol is one of the worlds biggest corporate air polluters.
“Our GHG reduction target for the Sasol group remains unchanged – 30%, by 2030. To be clear, we haven’t changed what we’re aiming for, but we have optimised how we get there, making sure we protect value along the way while remaining compliant with air quality legislation,” said CEO Simon Baloyi in the results presentation.
“Initially our roadmap was built on four key levers which included the use of LNG as a transition feedstock. As we said before, the higher market pricing of LNG makes it uneconomical to use for own production. We had to adapt our roadmap, ensuring that we remain on track while responding to evolving market conditions.
All the other levers remain unchanged including energy efficiency and the integration of renewable energy. We have made good progress on our renewable energy commitment. To close the gap, we are now considering renewables more than 1 200MW as well as other value- accretive business-building opportunities like sustainable carbon feedstocks and carbon offsets, to reduce emissions.
To ensure we preserve value, the ERR is maximising Secunda Operations’ production for as long as possible, with no planned turndown in volumes. Our optimised roadmap is set to restore Secunda Operations to 7,2 million tons per annum in Financial Year 30 – a significant step up from the previously communicated 6,7 million tons per annum.
However, as natural gas declines, we expect production to decrease beyond 2034 and we will optimise the site to ensure it remains profitable.
The revised roadmap has lowered our capital requirements to between 11 and 16 billion rand, from our previous range of 15 to 25 billion rand. There is still potential for further reduction as we continue to optimise our roadmap.
We will review this approach going forward in conjunction with the evolving macro and regulatory landscape, including carbon tax and policy direction ” concluded Baloyi.
The EU’s Carbon Border Adjustment Mechanism (CBAM), set to come into effect in 2026, will hurt companies exporting to the EU if they are not compliant. The CBAM is designed to address carbon leakage and support the EU’s ambitious climate goals.
The CBAM will impose import charges on products, such as steel, cement and electricity, based on the CO₂ emissions embedded in their production. By levying these charges, the EU aims to level the playing field between domestic producers, who are subject to strict carbon regulations, and foreign producers, who may not face similar constraints.
Sectors most likely to be affected by the CBAM are those heavily reliant on EU exports such as the chemicals and manufacturing industries. These traditionally carbon-intensive sectors will face increased costs and compliance requirements under the CBAM.
Sasol, which is a significant exporter to the EU, will need to adopt greener practices to mitigate these costs and maintain market access.
Author: Bryan Groenendaal
