Stronger rand and one-off items weigh on Sasol
There was also a strike at the petrochemical company’s Secunda mining operations, which cost it about R1.06bn
A stronger rand and one-off items took the wind out of Sasol’s sails in the year to end-June, with headline earnings per share (HEPS) dropping by between 11% and 21%.
The petrochemical company said in a trading update on Tuesday that, excluding the effect of the hedging programme, the average rand-dollar exchange rand firmed 6% to R13.61 from R14.52 in 2016 .
As of the end of June, when translation took effect, the rand was 11% stronger against the dollar at R13.06 from R14.71.
There was also a strike at its Secunda mining operations in the first half of the financial year, which cost the company about R1.06bn.
In the review period, the company partially impaired its North American GTL project to the tune of R1.7bn.
The Brent crude price was up 15% on average at $49.77 a barrel.
On an operational level, Sasol said it delivered a strong business performance across most of the value chain, with its Secunda Synfuels Operations reporting record volumes and its Eurasian Operations delivering their highest production volumes since 2015.
Secunda Synfuels Operations increased production volumes by 1% to a record 7.83-million tonnes, while Natref production volumes decreased by 5%. Eurasian Operations increased production volumes by 6% due to "strong" product demand.
The chemicals business reported a 2% increase in sales volumes, mainly as a result of stronger demand, higher chemical margins and improved plant stability.
But investors cheered the trading update, with the share price jumping just more than 3% to R384.91 in early trade on the JSE, giving Sasol a market cap of R250.2bn.