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Sasol Earnings Slump on Weaker Oil and Petrochemical Prices

South Africa's energy and chemicals firm Sasol booked a 34% decline in its core earnings for the second half of 2023 due to lower crude oil and petrochemicals prices.  

Sasol reported on Monday core headline earnings per share (HEPS) of $0.95 (18.39 South African rand) for July to December 2023, down from $1.27 (24.55 rand) for the same period of 2022, dragged down by lower earnings before interest and tax (EBIT) due to "challenging market conditions."

"Sasol's performance for the first six months of 2024 continued to be negatively impacted by the continued volatile macroeconomic environment, with weaker oil and petrochemical prices, unstable product demand and continued inflationary pressure," the company said in a statement today.

"Despite some operational improvements in South Africa, persistent underperformance of the state-owned enterprises involved in Sasol's value chain and the weaker global growth outlook continue to impact Sasol's business performance."  

Sasol's interim gross cash dividend for the six months to December 2023 was lowered to 2 rand per share, down from 7 rand for the same period of 2022.

The average sales basket price for July to December was 24% lower than the same period of 2022, driven by a combination of lower oil, feedstock, and energy prices and weak market demand, the company said.

Sasol's focus remains on the expenses it can control "to manage macro volatility and position for a chemicals upcycle," the firm said in a presentation. Sasol faces a challenging and complex operating environment, with higher inflation, muted economic growth, weak global chemicals demand and margin pressure, regulatory uncertainty on the domestic market, and power and infrastructure constraints in South Africa, it noted in the presentation for the first-half 2023/2024 results.

Going forward, operational improvement will be a key focus area against an adverse macro backdrop, Sasol said.  

By Charles Kennedy for

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