Sasol set for stronger 2021 interim earnings despite headwinds

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Sasol
Sasol

Sasol is set for a stronger 2021 half-year earnings, thanks to cost containment measures that helped it weather the impacts of hurricanes and lower oil prices.

The petrochemical firm which had a turbulent 2020 period said on Friday it expects earnings per share and headline earnings per share to rise by more than 100% compared to the previous half year. 

Sasol will release its 2021 interim financial results on 22 February. 

Earnings per share is expected to be between R22,76 and R24,07 compared to the prior half year earnings per share of R6,56. Headline earnings per share is expected to settle between R18,59 and R19,78 , against the previous R5,94.

The strong performance was driven by a combination of improved cash cost, working capital and capital expenditure performance  despite a severe decline in crude oil prices,  softer chemical product prices and the effects of Covid-19, the company said. 

Net income is expected to decline by between 0% and 10% from R19,8 billion in the prior year, to between R17,9 billion and R19,8 billion.

The company linked the decline to a 23% decrease in the rand per barrel price of Brent crude oil coupled with lower sales volumes due to softer demand, due  to COVID-19 lockdowns and the hurricanes  which adversely impacted gross margins. However, the decline was  offset by a strong cost performance,  it said.

Sasol share price gained 7.3% in morning trade at R162.50

The company had battled natural disasters during the period, which temporary shut down its US Lake Charles Chemicals Project, as hurricanes battered the US Gulf Coast. The shutter resulted in lost production of approximately 300 kilotonnes for the 2021 financial half-year.

The 2020 financial year saw Sasol post a R91.3 billion loss, and impairments to the tune of R111.6 billion, with the financing of Lake Charles contribution to earnings losses. Sasol announced in November the chemicals project was complete at a total capital cost of $12.8 billion, against an initial estimate of $8.1billion in 2014.


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