Sasol Ltd. (SOL) sees first-half profit climbing as much as 28 percent on the weakening South African rand even as the world’s biggest producer of liquid fuels from coal writes down the value of its Canadian gas assets.
Headline earnings per share probably rose 22 percent to 28 percent in the half to Dec. 31 from 24.01 rand a year earlier, the Johannesburg-based company said in a statement today. The writedown will be about 5.3 billion rand ($488 million).
The “weakening of the average rand-dollar exchange rate and a slight improvement in chemical prices further supported Sasol’s financial performance, despite the Brent crude oil price remaining relatively flat,” the company said in the statement.
Sasol, paying expenses mostly in rand, said it’s benefiting from the currency’s drop against the dollar in the second half from a year earlier. The company plans to save 3 billion rand from cost cuts in the next two to three years.
The stock rose 1.1 percent to 543.71 rand in Johannesburg trading, paring an earlier gain of as much as 2.2 percent.
Sasol wrote down the value of its Montney shale-gas assets in Canada after partner Talisman Energy Inc. agreed to sell part of its share in the venture for 1.5 billion Canadian dollars ($1.4 billion) in December. There was also a “further decline of conditions in the North American gas market,” Sasol said.
The company’s synthetic-fuels production volumes remained stable at 3.7 million metric tons, Sasol said.
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