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Sasol -- Trading update
Sasol’s headline earnings per share (HEPS) for the financial year ended 30 June 2014 is expected to increase by between 11% and 17%, and earnings per share (EPS), for the same period, is expected to increase by between 9% and 15%, compared to the prior financial year.
Sasol’s profitability for the 2014 financial year was positively impacted by:
- Synfuels production volumes of 7,6 million tons, up by 2%, despite a full shutdown
- A 97% annual utilisation rate achieved at the ORYX GTL plant
- Normalised cash fixed costs slightly below market inflation
- 17% weaker average rand/ US dollar exchange rate
Conversely, the following factors negatively impacted profitability:
- Significant increase in the share-based payment expense of R3,6 billion due to a 47% higher share price
- An impairment charge, as previously reported, of our Canadian shale gas assets of R5,3 billion (CAD 540 million)
Looking specifically at the Group’s operational performance, Sasol Synfuels recorded a strong performance, with production volumes increasing by 2% to 7,6 million tons for the year, exceeding our previous guidance of 7,3 to 7,5 million tons. In addition, our ORYX GTL facility performed exceptionally well, with an average utilisation rate of 97% for the financial year. Sasol’s solid financial performance was further supported by a 17% weakening of the average rand/US dollar exchange rate, and a slight improvement in chemical prices, while the average Brent crude oil price remained relatively flat for the period under review.
Our share price increased by 47% over the financial year to a closing price on 30 June 2014 of R632,36. This resulted in a substantial year-on-year increase in the long-term employee share-based payment expense of R3,6 billion. As communicated in an announcement released on the Stock Exchange News Service of the JSE Ltd., we received a substantial reduction of R2,5 billion (EUR168,2 million) to the fine imposed on Sasol by the European Commission in 2008. This decision can still be appealed by the European Commission. On the other hand, penalties of R534 million were imposed on us by the South African Competition Tribunal relating to Sasol Polymers’ propylene and polypropylene pricing from 2004 to 2007. We are appealing this decision. Both these decisions affected HEPS and EPS for the period under review.
At 31 December 2013, we impaired our Solvents Germany GmbH assets by R466 million (EUR32 million) based on a decision to dispose of the affected assets. This transaction was completed on 31 May 2014 when merger control approval was obtained, with a loss of R966 million (EUR67 million) recognised on the disposal in addition to the impairment.
Sasol's financial results for the year ended 30 June 2014 will be announced on Monday, 8 September 2014.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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