The strong rand and volatile oil price offset volume growth at Sasol’s local and Eurasian operations in the year to June and will be reflected in a decrease of 11% to 21% in headline earnings, the company says.
Although Sasol’s earnings a share will rise by 48% to 58% compared with 2016, they are distorted as the company suffered a R9.9bn impairment of the group’s Canadian shale gas assets that year.
Sasol is SA’s largest listed energy company, selling liquid fuels, gas and chemicals. It operates globally and recently began work on a chemicals complex in Lake Charles, Louisiana.
By the end of June, Sasol had spent $7.5bn on Lake Charles, which was now 74% complete, joint CEOs Bongani Nqwababa and Stephen Cornell said on Tuesday. In 2016, Sasol alarmed the market by announcing an increase in the project’s cost from $9bn to $11bn.
The group’s shares added 3.68% to R385.63 after the announcement as oil firmed and the rand weakened. Despite its substantial chemicals business, Sasol shares are heavily influenced by oil and currency.
Capital Economics commodities analysts said this week that oil prices, which were weak in the first half of 2017, were expected to revive in the second half. They had reflected fears of rising US shale oil production, but the number of active drill rigs had stabilised and US stocks of crude oil were declining.
Sasol’s synfuels sales fell 2% to 60-million barrels. Although the Secunda synfuels plant increased volumes 1% to a record 7.83-million tonnes, a higher proportion was used in making chemicals. About 2% of output from the Natref refinery in Sasolburg was lost after an explosion two months ago and another 3% through shutdowns. The Oryx gas-to-liquids plant in Qatar grew volumes 16% to 5.5-million barrels and operated at 95% capacity on average.
Sasol Mining produced 11% less saleable coal at 36-million tonnes after labour disruptions in the first half of the year.
Sasol’s 70% share of gas from the Mozambique licence areas increased 2% to 116.6-billion standard cubic feet as the Loop Line 2 project, which hiked pipeline capacity, came into full operation in the December quarter. In the March quarter, a project to resolve the bottleneck at the central processing facility in Mozambique was completed, raising production capacity.
Normalised (adjusted for disposals and shutdowns) total sales of base chemicals rose 1% to 3.13-million tonnes as volumes were affected by unplanned shutdowns.
The basket price rose 6% to $809 per tonne.
Normalised sales of performance chemicals rose 2% to 3.5-million tonnes in line with market guidance, Sasol said. The R13.6bn Fischer-Tropsch wax expansion project had produced 92,000 tonnes of hard wax.