Petrochemicals giant Sasol expects to deliver a strong set of results for the six months ended December 31, 2020, despite the effects of the Covid-19 pandemic, a severe decline in crude oil prices and softer chemical product sales.
Additionally, the company’s Lake Charles production, in the US, was impacted on by hurricanes in the US Gulf Coast, resulting in lost production of about 300 000 t in the period under review.
The company says its results were nonetheless underpinned by strong cash cost, working capital and capital expenditure performance.
Sasol expects to report earnings per share (EPS) of between R22.76 and R24.07 for the six months under review, compared with the EPS of R6.56 reported for the six months ended December 31, 2019.
Headline earnings per share (HEPS) should be between R18.59 and R19.78, compared with the prior half-year HEPS of R5.94.
Core HEPS, however, are expected to be between R6.94 and R8.79 apiece, compared with the prior corresponding period’s core HEPS of R9.25.
The company’s core HEPS are calculated by adjusting headline earnings with non-recurring items, earnings losses of significant capital projects, which have reached beneficial operation and are still ramping up, all translation gains and losses (realised and unrealised), all gains and losses on its derivatives and hedging activities (realised and unrealised), and share-based payments on implementation of broad-based black economic empowerment transactions.
Sasol’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) is expected to decline by between 0% and 10% year-on-year for the six months under review to between R19.6-billion and R19.8-billion, compared with adjusted Ebitda in the prior comparable six-month period of R19.8-billion.
This decline results from a 23% decrease in the rand per barrel price of Brent crude oil, coupled with lower sales volumes owing to softer demand attributable to Covid-19 lockdowns and the aforementioned hurricanes' impact on gross margins.
Among the company’s notable noncash adjustments for the period under review are unrealised gains of R5.4-billion on the translation of monetary assets and liabilities owing to the 15% strengthening of the closing rand/dollar exchange rate compared with June 2020, as well as a R3.3-billion gain on the realisation of the foreign currency translation reserve – relating to the divestment of 50% in the Lake Charles Complex’s base chemicals business.
Sasol will release its interim results on February 22.