March 10 (Bloomberg) -- Sasol Ltd., the biggest producer of liquid fuels from coal, said first-half profit rose 26 percent as a weaker rand countered a 5.3 billion-rand ($492 million) writedown in the value of its Canadian gas assets.
Earnings excluding one-time items climbed to 18.4 billion rand, or 30.19 rand in the six months through December, from 14.5 billion rand, or 24.01 rand a share, a year earlier, the Johannesburg-based company said today in a statement. It will pay a record interim dividend of 8 rand a share, a 40 percent increase from a year earlier.
Sasol, whose expenses are mostly in rand, said it’s benefiting from the currency’s decline against the dollar. The rand traded at an average of 10.07 to the dollar in the first half, 16 percent weaker than a year earlier. Sasol plans to save 3 billion rand from cost cuts in the next two to three years.
“We are moving full-steam ahead to go live with our new operating model, which will drive streamlined management structures, cost-effective processes and meaningful savings,” Chief Executive Officer David Constable, said in the statement. The cost of implementing the enhancement program will be about 1.2 billion rand in this financial year, the company said.
Sasol uses its own technology to make gasoline, diesel and jet fuel from the coal it mines in South Africa and from gas pumped off Qatar.
It also owns shale-gas assets in Canada, where it wrote down the value of its Montney properties after partner Talisman Energy Inc. agreed to sell part of its share for C$1.5 billion ($1.3 billion) in December, Sasol said Feb. 14.
Production from Sasol’s synthetic-fuels unit rose 3 percent to 3.7 million metric tons in the first half from a year earlier. The east factory had a shutdown in September, the largest undertaken yet at the unit, bringing an additional 36,000 people to the site. Synfuels volumes are forecast at 7.3 million tons to 7.5 million tons for the year.
Sasol plans to make a final investment decision this year for an ethane cracker project in Westlake, Louisiana, and a gas-to-liquids, or GTL, plant at the site 18 to 24 months after.
“What that allows us to do is demonstrate to the board and to the shareholders that we can execute large projects on the Gulf Coast, because the cracker will be about 80 percent complete before a final investment decision on the GTL” plant, Constable said in an interview at the company’s Johannesburg office.
Sasol needs to raise $5 billion to $7 billion to build the cracker, which will convert ethane natural gas to ethylene, used to produce raw materials for goods such as paint and detergents, and start up in 2017, Constable said on Sept. 9. The GTL plant would be the first of its kind in the U.S. and may cost as much as $14 billion.
A design study has been extended for a GTL plant in Uzbekistan and Sasol is looking for a partner for its 19 percent stake in the project, it said in the statement.
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