This decline was primarily influenced by a marked reduction in both Brent crude oil prices and refining margins, as well as a drop in sales volumes.
Sasol's recent financial results for the six months ending 31 December 2024 reveal a company grappling with significant economic headwinds.
The energy and chemicals giant, well-known for its vast operations, reported a 10% decrease in revenue, totalling R122,1 billion.
This decline was primarily influenced by a marked reduction in both Brent crude oil prices and refining margins, as well as a drop in sales volumes.
According to the results, the average rand per barrel of Brent crude oil saw a sharp 13% decline, a factor that severely impacted revenues alongside a 5% decrease in sales volumes attributed to reduced production and tepid market demand.
In response, Sasol has implemented stringent cost controls and capital management measures to mitigate the challenging conditions.
Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) fell to R23,9 billion, representing a 15% decrease from the previous year. However, it is noteworthy that the contribution from International Chemicals rose significantly from 6% to 13%, reflecting a shift in focus amidst regional struggles.
Moreover, earnings before interest and tax (EBIT) plummeted to R9,5 billion, a staggering 40% drop compared to the prior period. This downturn was exacerbated by non-cash adjustments, including a net loss of R6,2 billion due to remeasurement items and further impairments to Sasol’s Secunda and Sasolburg liquid fuels refinery cash-generating units, which remain in a state of full impairment.
The situation painted by Sasol's results is concerning, as basic earnings per share (EPS) have decreased by an alarming 52% to R7,22 per share, while headline earnings per share (HEPS) have dipped by 31% to R14,13 per share.
On a more positive note, cash generated by operating activities experienced a 20% increase to R17,6 billion, largely driven by favourable changes in working capital. Despite this uptick, Sasol continues to navigate a perilous financial landscape, with capital expenditure decreasing by 6% to R15,0 billion.
As of 31 December 2024, total debt stood at R116,9 billion (approximately USD 6,2 billion), representing a slight reduction from R117,7 billion in June 2024. Nonetheless, net debt climbed to R81,8 billion (USD 4,3 billion), underscoring the ongoing challenges faced by the company amidst fluctuating commodity prices and market pressures.
BUSINESS REPORT