Prominent South African company’s profit wiped out by R8 billion hit

Sasol’s R7.8 billion writedown in parts of its South African and Mozambican businesses, together with a decline in oil and chemical prices, triggered a drop of as much as 99% in half-year profit. 

The South African fuel and chemicals maker expects earnings per share in a range between R0.10 and R0.80 for the six months ended 31 December, compared with R7.22 a year earlier, it said in a statement Thursday. 

The Johannesburg-based company is booking a R3 billion impairment on its Secunda liquid-fuels refinery in South Africa, which remains fully impaired.

It’s also writing down R3.9 billion on its production-sharing agreement it Mozambique after a revision on production timelines delayed monetization. 

Sasol is the biggest producer of liquid fuels from coal. A 17% decline in the price of Brent crude in rand terms, together with a 3% drop in the average chemicals basket price in dollar terms, contributed to the decline in profit. 

Sasol uses coal to make most of its products and is the second-biggest polluter in South Africa. Its plans to lower emissions include substituting the dirtiest fossil fuel with natural gas, adding renewable energy and potentially green hydrogen.

Adjusted earnings before interest, tax, depreciation and amortization will decline by a range of 4% to 21% to between R19 billion and R23 billion.