Sasol share price resilient despite sharp drop in earnings
This sharp decline in basic earnings can be attributed to the impairment of assets, including a R35 billion write-down of its Secunda facility.
Key Takeaways:
Sasol Limited reported a 13% increase in annual profit.
Headline earnings per share (HEPS) increased significantly from the previous year.
However, basic earnings per share experienced a sharp decline of 78%
Sasol has decided to reduce its final dividend for the year by 32%
The downward trend in chemicals basket prices throughout the year further added pressure on Sasol's financial performance.
Sasol FY23 results
Sasol Limited, a global energy and chemical company, has reported a 13% increase in annual profit, despite facing challenges from weaker crude prices. This increase was primarily driven by enhanced operations during the second half of the year.
Sasol's headline earnings per share (HEPS), stood at 53.75 South African cents for the 12 months ending June 30. This marks a significant increase from the 47.58 cents reported a year ago.
However, basic earnings per share witnessed a steep fall of 78%, dropping from R62.34 in the previous year to R14 in FY23. This sharp decline can be attributed to the impairment of assets, including a R35 billion write-down of its Secunda facility. Other contributing factors include the inflationary impact on costs, the decline in Brent crude oil price, and refining margins in the latter part of the year. Moreover, chemicals basket prices were on a downward trend during 2023.
Final dividend reduced
In response to these challenges, Sasol has strategically decided to reduce its final dividend for the year to R10 per share, down 32% from the R14.70 per share declared last year. This decision was primarily driven by the dramatic fall in basic earnings.
Sasol – trading view
The share price of Sasol currently trades within a broad range or channel. The price currently trades near the support of this range while also trading within oversold territory.
For new long positions, traders might prefer to see a bullish price reversal confirmed off current support, accompanied by a move out of oversold territory. A bullish reversal might be confirmed on a close above the dotted trend line on the chart.
Should this scenario manifest, 25300 would be the initial resistance target from the move, while a close below the low at 23470 or channel support could be used as a stop loss consideration for the trade.
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