Sasol’s Fiscal Fortitude: Navigating Challenges, Revealing Resilience

Sasol Limited revealed its financial performance for the fiscal year ending June 30, 2023. The report sheds light on the company’s ability to navigate a tumultuous economic environment marked by operational obstacles and global economic volatility.

Operational Challenges and Economic Headwinds

Sasol’s financial results for the year were influenced by a combination of factors including a weaker global economic growth trajectory, heightened inflation, depressed chemical prices, and elevated feedstock and energy costs. The company faced significant headwinds as the latter part of the fiscal year witnessed a softening of the Brent crude oil price and refining margins. However, the company managed to partially counterbalance this impact through a weakening Rand/US Dollar exchange rate.

A significant hurdle was the downward trend in chemical basket prices, contributing to a sustained pressure on Sasol’s gross margin. Despite marginal relief from lower feedstock and energy costs, the global demand for chemicals remained subdued, particularly in the American and Eurasian operations. Furthermore, the company’s supply chains and sales volumes were constrained by the underperformance of state-owned enterprises in South Africa, highlighting the intricate relationship between public institutions and the private sector.

Operational Turnaround

Notably, the second half of the fiscal year witnessed an operational recovery for Sasol. The company executed targeted mitigation strategies to address the production disruptions experienced earlier in the year. Detailed insights into production and sales metrics can be accessed via Sasol’s official investor center link.

Financial Projections

The company’s adjusted earnings before interest, tax, depreciation, and amortization (adjusted EBITDA*) are anticipated to decline by 2% to 16%, with figures ranging between R60.6 billion and R70.6 billion. Shareholders should take note of the following financial projections for the 2023 fiscal year:

MetricExpected RangeYear-on-Year Change
Basic EPSR10.26 – R16.49-74% to -84%
Headline EPSR49.47 – R56.13+4% to +18%
Core HEPSR41.54 – R51.14-25% to -39%

Addressing Non-Cash Adjustments

Sasol’s financial report also underlined significant non-cash adjustments for the year, including unrealized gains of R5.8 billion stemming from monetary assets and liabilities translation. On the flip side, the company reported a net loss of R33.9 billion on remeasurement items. Impairment charges were recorded on various cash-generating units (CGUs) within Sasol.

Commitment to Emission Reduction

Despite the challenges, Sasol made commendable strides in implementing its emission reduction roadmap (ERR). This initiative, in response to environmental concerns, has progressed despite internal and external pressures on the business. The company continues to optimize its ERR and explore technology and feedstock solutions to further advance its sustainability goals.

Upcoming Financial Results Release

Sasol’s complete financial results for 2023 will be disclosed on August 23, 2023, at 09:00 AM (SA time). The release will be hosted by President and Chief Executive Officer Fleetwood Grobler and Chief Financial Officer Hanré Rossouw. Shareholders and stakeholders can engage further through the provided webcast or teleconference call links.

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