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Sasol - production and sales metrics published
Sasol has published its production and sales performance metrics for the year ended 30 June 2018, incorporating an update on its Lake Charles Chemicals Project, on the Company’s website at www.sasol.com, under the Investor Centre section or via this URL: www.sasol.com/investor-centre/financial-reporting/business-performance- metrics
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Sasol - trading statement
Sasol is expected to deliver a resilient set of results, underpinned by higher sales and production volumes and much higher crude oil and product margins in the second half of the financial year. Our financial results were however negatively impacted by several unplanned Eskom electricity supply interruptions and two internal outages at our Secunda Synfuels Operations (SSO) that resulted in lower production volumes.
Our underlying cash flow performance is expected to be strong. Earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to increase by between 6% and 16%. Core headline earnings per share (HEPS) are however expected to decrease by between 1% and 11% (approximating R0.46 to R4.30 per share) compared to the 2017 financial year (prior year) Core HEPS of R38.47. The difference between Core HEPS and EBITDA in the current year is largely due to depreciation of approximately R16 billion and employee share-based payment expenses of R1.5 billion due to the marked improvement of the Sasol share price at the end of the financial year. The share- based payment relating to our Khanyisa Broad-Based Black Economic Empowerment (B-BBEE) transaction of R3 billion is excluded from Core HEPS and EBITDA as it is considered to be a once-off and non-cash item.
HEPS for the financial year ended 30 June 2018 are expected to decrease by between 16% and 26% (approximating R5.64 to R9.16 per share) compared to the prior year HEPS of R35.15. Earnings per share (EPS) for the same period are also expected to decrease by between 52% and 62% (approximating R17.46 to R20.80 per share) from the prior year EPS of R33.36.
From a macro-economic perspective, the stronger average rand/US dollar exchange rate and the negative impact of remeasurement items, largely driven by the stronger longer-term rand exchange rate, resulted in a much lower operating profit and earnings per share for the financial year. However, the closing exchange rate weakened by 5% which negatively impacted gearing and the valuation of our derivatives and foreign debtors and loans. Our hedging programme for the 2018 and 2019 financial years is complete and positions Sasol well to steer through these periods of volatility. The average Brent crude oil price moved 28% higher compared to the prior year, and, since December 2017, spot prices have moved closer to the USD75 per barrel mark which positively impacted our results. The rand per barrel oil price increased by approximately 20% to R818 per barrel compared to 2017, (refer to table above), and has subsequently increased by approximately 15% – 25% since the end of June 2018. The spot rand per barrel oil price is now ranging between R950 and R1 050 per barrel.
Sasol experienced some challenges with regards to its operational and cost performance during the year, largely due to planned and unplanned production interruptions at Natref and a safety related stoppage at Mining in the first half of the year, which adversely impacted sales and cost across the value chain. Despite two additional safety related stoppages at Mining and unplanned electricity outages in Secunda, we managed to claw back and deliver a stronger operational performance in the second half of the year through focused interventions and management actions. Our Eurasian operations increased production volumes by 3% due to stronger product demand and increased plant availability. In the last quarter, we have seen considerably higher yields and production volumes across the value chain which are more closely aligned to our internal targets. We are well positioned to continue with this improved operational performance into the 2019 financial year.
Sales volumes increased by 1% for our Performance Chemicals business spurred by robust market demand despite Eskom electricity supply interruptions. Base Chemicals reported a 1% decrease in sales volumes mainly due to production interruptions at SSO and an initial stock build for our high density polyethylene joint venture in the US. Excluding the impact of Eskom electricity supply interruptions, sales volumes increased by 1%. Liquid fuels sales volumes were down 2% due to lower volumes from SSO and Natref and a challenging South African retail liquid fuels market.
A detailed production summary and key business performance metrics for the financial year for all our businesses is available on our website, www.sasol.com
The tax litigation matter in respect of our crude oil procurement process is ongoing and we expect that the court hearing will take place on 21 August 2018. No further provisions have been recognised in the current year in respect of this matter. Our results for the financial year may be further affected by adjustments resulting from our year-end closure process. This may result in a change in the estimated earnings noted above. All references to years refer to the financial year ended 30 June.
Sasol's financial results for the financial year ended 30 June 2018 will be announced on Monday, 20 August 2018.
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| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
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