Sasol FY Profit Drops as Power Outages Hit Production

FILE: Sasol's headquarters in Johannesburg. Picture: AFP

South African petrochemicals group Sasol said on Monday full-year profit dropped 6%, pulled down by interruptions to production, a stronger rand and employee share-based payment expenses.

Core headline earnings per share (HEPS) for the year ended 30 June fell to R36.03 compared with R38.47 a year earlier. HEPS is the main profit gauge in South Africa, which strips out certain one-off items.

The firm said its financials were affected by unplanned electricity supply interruptions from state-owned power utility Eskom and two internal outages at its Secunda Synfuels and Natref operations that resulted in lower production.

A stronger average rand-to-dollar exchange rate compared with a year earlier also hurt results, Sasol said, while expressing optimism about operations in the coming year.

“2019 will be a defining year for Sasol with the start-up of the LCCP in the US, a catalyst for transforming our earnings profile,” Chief Executive Officer Stephen Cornell said in a statement.

The Lake Charles Chemicals project ethane cracker in North America, which has been hit by delays and rising costs, is about 88% complete and is expected to cost $11.13 billion, the firm said.

Sasol, the world’s top manufacturer of motor fuel from coal, said earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10% to R52 billion.

The difference between core headline earnings and EBITDA was due to depreciation costs of R16 billion and employee share-based payment expenses of R1.5 billion, Sasol said.

The company declared a final dividend of R7.90 per share, up 1.3% year-over-year. That brings its total dividend declared for the period to R12.90 per share, compared with R12.60 per share a year earlier.