Sasol earnings hamstrung by Eskom, Transnet challenges

Sasol’s earnings for the second half of 2023 are expected to drop significantly as the country’s state-owned enterprises continue to underperform.

Sasol released a trading update today, revealing that its financial results for the six months ended 31 December 2023 were negatively impacted by several factors.

The company pointed to a continued volatile macro-economic environment, with weaker oil and petrochemical prices, unstable product demand and ongoing inflationary cost pressure.

“Despite some operational improvements in South Africa, persistent underperformance of the state-owned enterprises involved in Sasol’s value chain and the weaker global growth outlook continues to impact Sasol’s business performance,” the company said.

Sasol’s adjusted EBITDA for the six months is expected to be between R26.2 billion and R29.4 billion compared to R32.0 billion in H2 2022. 

This represents a decrease of between 8% and 18%.

Sasol also expects the following changes to its earnings:

• Earnings per share are expected to decrease by between 29% and 43%.
• Headline earnings per share are expected to decrease by between 28% and 42%

The company also listed notable non-cash adjustments for the six-month period, including a net loss of R5.8 billion.

This loss was mostly due to a R3.9 billion impairment from its Secunda liquid fuels refinery, which was impacted by higher electricity costs and lower oil prices.

Sasol also saw a R1.1 billion impairment from its Chemicals Africa’s Chlor Alkali and PVC & Polyethylene units due to lower demand.

Sasol is expected to release its 2024 interim financial results on Monday, 26 February 2024.