Sasol Sees Stronger 2014 Profits on Higher Prices, RandKevin Crowley
Sasol Ltd., the world’s biggest coal-to-gasoline maker, said it will post “strong” earnings growth for the 2014 financial year due to higher oil and chemical prices and favorable currency swings.
Profit in the year to June 30 will probably exceed attributable earnings of 26.3 billion rand ($2.6 billion) the previous year, the Johannesburg-based company said in a statement today. Higher product prices and a weaker rand will increase earnings, it said.
Sasol, which pays most expenses in the South African currency, plans to cut 3 billion rand of annual spending over the next two to three years to trim labor and other costs in its home market. The company’s petrochemical plant in Louisiana, which may cost as much as $7 billion, is progressing according to plan, it said.
“We continue to focus on those factors within our control including cost containment, operational efficiencies and margin improvement,” Sasol said in the statement.
The stock climbed 0.3 percent to 505.69 rand at 12:07 p.m. in Johannesburg, valuing the company at about 328 billion rand.
Free cash flow for the three months to Sept. 30 fell 23 percent from a year earlier due to higher capital expenditure, the company said. Normalized cash fixed costs are “slightly above” the South African producers’ price index, it said.
Production at Sasol’s synfuels division will be 7.3 million metric tons to 7.5 million tons for the 2014 fiscal year, it said. The company produced 7.4 million tons of synfuels in the year ended June 30.