- Sasol’s earnings dropped 48% in the first half of 2024, with revenue falling 10% to R122.1 billion.
- The fuel segment reported a R1 billion loss, while mining and gas production posted gains of R2.3 billion and R3.9 billion, respectively.
- No interim dividend was declared due to exceeding the net debt threshold of US$4 billion, with net debt reaching US$4.3 billion.
Sasol’s earnings dropped by 48% in the first half of the 2024 financial year compared to the previous period. The company reported a 10% drop in revenue to R122.1 billion, driven by a 13% decrease in the average rand per barrel Brent crude price, weaker refining margins, and lower fuel price differentials.
Sales volumes fell by 5%, reflecting reduced production and declining market demand. Impairments to its Secunda and Sasolburg liquid fuel refineries further dented earnings, as the company entirely wrote down both units.
Sasol’s basic earnings per share dropped 52% to R7.22, while headline earnings per share decreased by 31% to R14.13. The company chose not to declare a dividend, citing its policy of requiring 30% of free cash flow generation and maintaining net debt (excluding leases) sustainably below US$4 billion. As of December 31, 2024, Sasol’s net debt reached US$4.3 billion, with free cash flow showing a deficit of R1.1 billion.
“This exceeds the net debt trigger. Therefore, we did not declare an interim dividend,” the company stated.
The fuel segment dragged down overall performance, contributing to the poor results. On the other hand, Sasol’s mining division saw earnings more than double to R2.3 billion, primarily due to a revised coal supply agreement with Secunda Operations. Lower export coal prices reduced internal sales volumes, and higher costs slightly offset these gains.
Gas production surged, with earnings rising 65% to R3.9 billion, thanks to higher gas prices, increased production, and lower costs, despite remeasurement-related losses.
Sasol’s chemical businesses delivered mixed results across regions. African operations saw a modest 1% sales increase, while the Americas and Eurasia posted declines, with Eurasia reporting a R100 million loss.
The fuel business was the biggest challenge, posting a R1 billion loss. Lower Brent crude prices, shrinking refining margins, higher feedstock costs, reduced production, and a more substantial exchange rate contributed to the steep loss.
By not declaring a dividend, Sasol underscored the financial pressure it faces, especially with its debt surpassing the threshold. Strong performances in the mining and gas segments provided some relief, but the company’s heavy reliance on the struggling fuel segment weighed on its overall financial health.
Sasol now looks to stabilise its operations amid a volatile market affected by lower oil prices, fluctuating demand, and production challenges. The group’s future success will depend on reviving its fuel segment and maintaining its mining and gas business strength.