Sasol expects 17% increase in six month earnings

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JOHANNESBURG, January 23 (ANA) – South African petro-chemical group, Sasol, said on Tuesday that it was expected to deliver a largely strong set of results for six months ended 31 December 2017 despite challenging operational performances and a more than R1 billion impairment charge.

Sasol said this six months performance was underpinned by a satisfactory operational performance across most of the value chain, higher crude oil and product prices and increased demand for its specialty chemicals products.

Sasol’s headline earnings per share (HEPS) for the six months are expected to increase by between 12 percent and 17 percent, approximating R1,81 to R2,57 per share, compared to the 2017 financial half year HEPS of R15,12.

However, Sasol said that its results were constrained by poor economic conditions in South Africa, which impacted on demand for the company’s products.

The company saw a less than satisfactory operational performance at its Natref refinery operations, a much stronger closing rand/US dollar exchange rate and the negative impact of remeasurement and once-off item charges.

The remeasurement is an impairment of Sasol’s US gas-to-liquids project amounting to R1,1 billion, or U.S.$83 million, and a partial impairment of its Canadian shale gas assets of R2,8 billion, or CAD281 million, driven mainly by the depressed gas market outlook.

In November, Sasol pulled out on all of its gas-to-liquids greenfields projects, including a U.S. one in Louisiana, which would have cost U.S.$13 billion to U.S.$15 billion.

“Average Brent crude oil prices moved higher by 19 percent and since December 2017, spot prices have moved closer to the U.S.$70 per barrel mark, which if sustained at these levels, are expected to positively impact our results during the second half of financial year 2018,” Sasol said.

“Similarly, our refining margins increased by 16 percent to U.S.$9,73 per barrel. We have also seen a steady increase in most commodity chemical prices. Despite the volatile macro-economic environment, average margins for most of our specialty chemicals products increased over the first six months ended 31 December 2017.”