Business plan pays off as Sasol gets back on track
Sasol says it is starting to see improved production rates, labour productivity and cost efficiency from its business improvement programme.
The positive quarterly update to September 2017 comes after a strike at the group’s Secunda plant earlier in 2017 reportedly cost it about R1bn.
Sasol says it is on track to achieve the targeted mining unit cost of production of between R260 to R270 per tonne for the financial year, which equals the 2016 mining unit cost of production plus inflation but excludes the cost of the strike.
"This is a strong indicator of the business stabilising post the strike and returning to normal operation," the group said.
Sasol said gas production was in line to achieve the upper end of its market guidance after a planned facility shutdown during the first quarter.
After "the shutdown, we have recovered the lost volumes and expect to achieve our full-year production volumes target.
"Our planned volumes are lower than the previous year due to the natural decline of the field," it said.
Natref production volumes in Sasolburg fell 6% because of an Eskom electricity supply interruption in late June, which flowed into July.
But Sasol still expected to achieve liquid fuels sales guidance of about 60-million barrels in the year.
Oryx gas-to-liquids output in Qatar rose 12% with an average utilisation rate of 99%.
"Based on this outstanding performance, we are increasing our expected full-year utilisation rate to above 92%, up 2% from our previous market guidance," Sasol said.
Methane-rich gas sales volumes plunged 21%, mainly due to lower market demand. The gas was, however, rerouted and used in Sasol operations.
Performance chemicals remained flat — mainly because of the effect of Hurricane Harvey on the group’s ethylene business in the US.
"Generally indifferent — in line with our expectations," Mish-al Emeran‚ an equity analyst at Electus Fund Managers‚ said on Thursday.
"Balance sheet strength has been under scrutiny given the Lake Charles [ethane cracker in the US] capex profile, but we think the group is in reasonably good health."