Sasol share price consolidates weak FY24 results update

Key Takeaways from FY24 update:

1. Financial results impacted by tough conditions: Sasol's financial results for the year ended 30 June 2024 were negatively affected by depressed chemicals prices and constrained margins, although somewhat offset by a stronger rand/oil price, improved refining margins, and higher sales volumes.
2. Decline in adjusted EBITDA: The adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) are expected to decline by between 2% and 17%, from R66.3 billion in the prior year to between R54.7 billion and R64.7 billion.
3. Significant non-cash adjustments: The company's earnings decreased by more than 100%, influenced by non-cash adjustments including a net loss of R55.8 billion after tax on remeasurement items, primarily due to impairments in various cash-generating units (CGUs), a R15.3 billion derecognition of deferred tax assets, and unrealised gains of R4.7 billion on the translation of monetary assets and financial instruments.
4. Earnings Per Share to decrease further: For the 2024 financial year, Basic Loss Per Share (LPS) is expected to range between R68.82 and R71.48, Headline Earnings Per Share (HEPS) between R12.28 and R21.95, and Core Headline Earnings Per Share (CHEPS) between R35.03 and R43.62, all significantly lower than the prior year's figures.
5. Operational improvements in Q4 2024: Sasol achieved a stronger operational performance in the fourth quarter, contributing to better results in the second half of the year. The company will present its 2024 financial results on 20 August 2024.

Results in brief

Sasol's financial results for the year ending 30 June 2024 faced significant challenges due to low chemicals prices and constrained margins. Despite improvements from a stronger rand/oil price and higher sales volumes, adjusted EBITDA is expected to decline by 2% to 17%, ranging between R54.7 billion and R64.7 billion. Earnings decreased by over 100%, impacted by major non-cash adjustments including R55.8 billion in net losses from impairments and a R15.3 billion derecognition of deferred tax assets. As a result, Basic Loss Per Share (LPS) is projected to be between R68.82 and R71.48, while Headline Earnings Per Share (HEPS) could fall between R12.28 and R21.95. Sasol will present its detailed financial results on 20 August 2024.

Sasol – technical analysis

The share price of Sasol currently trades within a broad range between levels 11600c (support) and 14900c (resistance).

Range traders might consider long entry on a bullish reversal off the 11600c level before targeting a move back towards the 14900c level. In this scenario, a close below the reversal low might be used as a stop loss indication. Long positions are however cautioned in lieu of the longer term trend remaining down.

For new short positions, traders might instead hope to see a bearish price reversal off the 14900c level. In this scenario, a close above the reversal high might be used as a stop loss indication while in search for a move towards support at 11600c.