Sasol interim results: revenue falls 10% as oil prices, refining margins decline
Energy and chemicals giant shows operational resilience despite R5.6bn in refinery impairments and increased debt levels
Interim Results Overview
Sasol's interim period reflects mixed performance with operational resilience amid challenging market conditions. The company's results were significantly impacted by lower oil prices and reduced refining margins, though showing some improvements in working capital management and international chemicals contribution.
Financial Performance
Revenue declined 10% year-on-year, driven by:
- 13% decrease in average Rand per barrel Brent crude oil price
- Significant decline in refining margins and fuel price differentials
- 5% reduction in sales volumes
EBIT fell 40% compared to the prior period, affected by:
- Substantial impairments of R5.0 billion for Secunda refinery
- Additional R0.6 billion impairment for Sasolburg liquid fuels refinery
- Non-cash adjustments and unrealized losses
Debt and Cash Position
- Net debt increased to R81.8 billion (US$4.3 billion)
- Free cash flow deficit of R1.1 billion, though improved 84% from prior period's R6.45 billion deficit
- No interim dividend declared due to net debt exceeding trigger level
Operational Highlights
Despite challenges, several positive developments emerged:
- International Chemicals division doubled its adjusted EBITDA contribution from 6% to 13%
- Successful implementation of cost management initiatives
- Maintained operational stability across key facilities
- Working capital improvements contributed to reduced cash flow deficit
These results demonstrate Sasol's resilience in a challenging environment while highlighting the need for continued focus on debt reduction and operational efficiency.
Broker ratings and long term price target
According to a Reuters poll, the long-term analyst rating consensus on Sasol remains a buy with a price target mean of 20044c.
Sasol – technical view
The long-term trend for Sasol remains down. In the short term the price is trading within a range between levels 7750 (support revised from 8030 previously) and 10445 (resistance).
The share price of Sasol has now started to rebound off range support. The reversal off range support suggests a move towards resistance at 10440. Range traders who are long might consider using a close below support at 7750 as a stop loss indication.
In lieu of the long-term downtrend still in place the long range trade does carry low levels of conviction.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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