South African petrochemical firm, Sasol, opened a new page on Monday and skipped paying a dividend after reporting a 31% decline in half-year profit on a fall in oil prices and lower sales volumes.
This is while Sasol’s finances continue to deteriorate as the gas and petrochemical giant faces a low oil price and declining sales volumes.
Sasol’s headline earnings per share for the six months to December 2024 were R14.13, down from R20.37 during the same period a year earlier. A decrease of 31%
Sasol’s financial performance for the six months ended 31 December 2024 was impacted by a challenging macroeconomic and operating environment.
The Revenue of R122,1 billion is 10% lower than the prior period, mainly as a result of:
- A 13% decline in the average Rand per barrel Brent crude oil price and a significant decline in refining margins and fuel price differentials; and
- A 5% decrease in sales volumes as a result of lower production and lower market demand as detailed in the Production and Sales Metrics published on 23 January 2025, which can be found on their website: https://www.sasol.com/sasol-sens/production-and-sales-metrics-six-months-ended-31-december-2024
Adjusted earnings before interest, tax, depreciation and amortization (adjusted EBITDA) of R23,9 billion is 15% lower compared to the prior period 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) of R9,5 billion is 40% lower than the prior period and impacted by non-cash adjustments including:
- A net loss of R6,2 billion from re-measurement 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 capitalized 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.
Sasol also reported a 5% decrease in sales volumes as a result of lower production and lower market demand.
The company said it did not declare a dividend because it ended the period with a negative free cash flow of R1.1 billion, while its net debt of $4.3 billion exceeded levels set in its capital allocation policy.
