JSE-listed energy company Sasol has reported that its financial results for the year ended June 30 were negatively impacted on by challenging market conditions, including continued pressure from depressed chemicals prices and constrained margins.
Despite these challenges, the company noted on August 12 that these factors were partially mitigated by the stronger rand oil price, improved refining margins and higher sales volumes.
Sasol’s stronger operational performance in the fourth quarter of the financial year also contributed to an overall improved performance in the second half of the year.
Sasol expects to report a 2% to 17% year-on-year decrease in adjusted earnings before interest, taxes, depreciation and amortisation of between R54.7-billion and R64.7-billion for the financial year.
The company disclosed that earnings for the year decreased by more than 100%, influenced by several significant non-cash adjustments.
The company expects to report a net loss of R55.8-billion after tax, with a gross remeasurement of R75.4-billion, primarily owing to impairments. These impairments included R45.5-billion net of tax (R58.9-billion gross) in the Chemicals America ethane value chain (covering alcohols, alumina, ethylene oxide, ethylene glycols and associated shared assets) cash-generating unit.
Additionally, Chemicals Africa’s polyethylene, chlor-alkali and polyvinyl chloride, and wax value chain cash-generating units faced impairments of R3.9-billion net of tax (R5.3-billion gross). Sasol said these impairments were largely driven by external factors, including prolonged softer market pricing and outlook.
The Secunda liquid fuels refinery cash-generating unit faced an impairment of R5.7-billion net of tax (R7.8-billion gross), which remains fully impaired as of June 30.
Sasol also derecognised a deferred tax asset valued at R15.3-billion, mainly related to assessed loss carry forward on its Chemicals America operations, which are not expected to be used. The company recorded unrealised gains of R4.7-billion before tax on the translation of monetary assets and liabilities and the valuation of financial instruments and derivative contracts.
Given these developments, Sasol expects to report a basic loss a share of between R68.82 and R71.48, compared with the prior year's basic earnings a share of R14.
Headline earnings per share (HEPS) are expected to be between R12.28 and R21.95, a 59% to 77% decrease on the prior year HEPS of R53.75.
Core headline earnings per share (CHEPS) are expected to be between R35.03 and R43.62, a 9% to 27% decrease on the prior year CHEPS of R47.71.
Sasol will present its financial results on August 20. 