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Sasol release trading statement
Sasol's headline earnings per share (HEPS) for the six months ended 31 December 2013 is expected to increase by between 22% and 28%, and earnings per share (EPS), for the same period, is expected to increase between 0% and 6%, compared to the prior comparable period. Excluding the impact of the impairment of Sasol's Canadian shale gas assets, EPS is expected to increase by between 44% and 50%.
Sasol's profitability for the first half of the 2014 financial year benefited from a strong group-wide operational performance, with Sasol Synfuels' production volumes remaining stable at 3,7 million tons for the period, despite a planned total and phased shutdown of the east factory during September 2013. Normalised Sasol Synfuels volumes increased by 3% on a comparable basis. Sasol's ORYX GTL operations continue to exceed expectations with an average utilisation rate of 94% for the period under review. The benefit of a 19% weakening of the average rand/US dollar exchange rate and a slight improvement in chemical prices further supported Sasol's financial performance, despite the average Brent crude oil price remaining relatively flat. Sasol expects their cost inflation for the period, normalised for the impact of the weaker rand, to be in line with market inflation.
Based on Talisman's announcement that it would sell its share in the Montney shale gas assets, coupled with a further decline of conditions in the North American gas market, Sasol undertook an evaluation of their share in the Montney assets. Sasol has taken the decision to impair their Canadian gas investment by approximately R5.3 billion (CAD540 million). Notwithstanding, Sasol's investments in the Montney region continue to provide a strategic resource and gas price hedge for our North American downstream GTL plans.
During December 2013, Sasol signed an agreement to dispose of most of our Sasol Solvents Germany GmbH assets. The conclusion of the sale is dependent on certain conditions being met, including approval by the European anti-trust authorities. An impairment of R466 million (EUR32 million) was recognised pertaining to the affected assets. It is expected, once final transaction approval has been obtained, that a loss on the disposal will be recognised during the second half of the 2014 financial year.
The disposal of Sasol's investment in Arya Sasol Polymer Company (ASPC) was completed on 16 August 2013 and the full purchase consideration has been received from the buyer. A final loss of R198 million has been recognised in the first half of the 2014 financial year on the disposal. The percentage increase in HEPS would have been higher if ASPC had been excluded from comparative periods. Sasol maintains a low gearing and solid financial position, supported by continued strong cash generation from their global operations.
Sasol's financial results for the six months ended 31 December 2013 will be announced on Monday, 10 March 2014.
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