South African energy and chemicals group Sasol confirmed on Friday that its earnings for the financial year to June 30, 2015, would be down on the previous year, despite a strong operational performance – the weaker result was largely attributed to the sharp fall in the oil prices during the period.
Headline earnings a share would decline by between 14% and 19%, or by between R8.42/share to R11.43/share, while earnings a share were expected to be between 3% lower and 2% higher. On a normalised basis, excluding the impact of one-off items, net impairment charges and the share-based payments, earning per share were expected to decrease by between 26% and 31%.
Profitability, the JSE-listed group said in a statement, had been negatively impacted by a 33% lower average Brent crude oil price, with an average price of $73.46/bl achieved in 2015, compared with $109.40/bl in 2014.
The price decline was partly offset by a 10% fall in the average rand/ dollar exchange rate and higher production and sales volumes for most of business units.
Liquid fuel sales volumes rose 5% to a record of 61.5-million barrels, exceeding previous guidance of 59-million barrels. The group’s base and performance chemicals businesses increased sales volumes by 2% and 3% respectively, while the Oryx gas-to-liquids facility, in Qatar, sustained a 90% utilisation rate.
Sasol also reported progress on actions taken to reduce costs and conserve cash (including lower capital spending and changes to its dividend policy) in response to its expectation of a “lower-for-longer oil price environment”.
The results, which would be announced on September 7, would also be impacted by a full reversal of the impairment of the wax expansion project of R2-billion, of which R1.3-billion was already recognised at December 31, 2014.
There would be a further partial impairment of R1.3-billion of its share in the Montney shale gas assets, in Canada, owing to a 19% decline in natural gas prices in North America. The impairment was additional to the R5.3-billion recognised in 2014.