Sasol Sees First-Half Profit Falling as Much as 28% as Oil Dropsby
Company posts charge of 7.6 billion rand mainly on shale asset
Plan to save 4.3 billion rand in costs progressing ``well''
Sasol Ltd., the world’s biggest producer of liquid fuels from coal, expects to report fiscal first-half profit declined as much as 28 percent after oil and chemicals prices plunged.
Headline earnings per share may drop to about 23.04 rand to 24.64 rand a share for the six months ended Dec. 31, from 32 rand a year earlier, the Johannesburg-based company said in a statement Thursday. The results include a 7.6 billion-rand ($465 million) charge mainly from a revaluation of Canadian shale-gas assets after prices sank, it said.
Business was “negatively impacted by challenging and highly volatile global markets, marked by a steep decline in global oil and commodity chemical prices,” Sasol said.
Brent crude oil, an international benchmark, plunged 41 percent in the second half of 2015, and continued its decline this year, touching a 12-year low of $27.10 a barrel on Jan. 20 because of a glut in supply. In addition to that slump, prices for a basket of Sasol’s commodity chemicals fell 23 percent in the half from the same period a year earlier.
Sasol mitigated declining commodity prices by boosting production at its Secunda synthetic-fuels operations by 3 percent in the six months to Dec. 31, compared with the same period a year earlier. Total liquid-fuel production for its energy business increased 4 percent.
A plan to reduce costs by 4.3 billion rand by the end of the 2016 financial year “continues to progress very well and we are on track to exceed our sustainable cost savings target for the current financial year,” the company said.
Sasol was helped by a 24 percent average decline in the South African rand against the dollar in the six months, compared with the previous period, it said.