Sasol skips H1 dividend on lower demand

Sasol, a global integrated energy and chemical company, recently reported a 31 per cent decline in its headline earnings per share for the 6-month period ending in December 2024. This decline was largely attributed to further write-downs of its Secunda and Sasolburg facilities. The company also experienced a 10 per cent drop in revenue, driven by a 13 per cent decline in the average rand per barrel of Brent crude oil prices, as well as a significant decrease in refining margins and fuel price differentials. Additionally, a 5 per cent reduction in sales volumes, due to lower production and market demand, further impacted the company's financial performance. To gain insights into Sasol's performance and future plans, CNBC Africa interviewed Sasol CEO, Simon Baloyi. Baloyi discussed the impairments on the Secunda and Sasolburg liquid fuels refineries, highlighting the company's long-term strategies for these assets. He emphasized the continued value of the integrated Secunda value chain and announced plans to address the impairments. While revenue declined in the first half of the fiscal year, Baloyi outlined strategic adjustments aimed at enhancing top-line performance in the coming months. These adjustments include prioritizing value over volume in international chemicals business segments and implementing cost discipline in both capital expenditure and operational expenses. Despite a 15 per cent decrease in adjusted EBITDA, Sasol managed to improve free cash flow through effective cost control measures. Baloyi discussed various cost-saving initiatives and anticipated further efficiency gains in the second half of the year. Operational challenges, such as a NatREF fire and coal quality issues, impacted production levels in the previous period. Baloyi reassured stakeholders that the company had taken measures to address these challenges and expected improved performance in the future. The company's international chemicals segment contributed significantly to Sasol's overall profitability, showing growth from 6 per cent to 13 per cent. Baloyi attributed this growth to deliberate actions focused on cost efficiency, asset optimization, and performance enhancements. He projected a substantial EBITDA uplift in the segment and emphasized the importance of generating returns from past investments. Sasol's net debt rose to 4.3 billion US dollars, leading to the decision to suspend dividend payments for the period. Baloyi outlined the company's plans to reduce debt levels and potentially resume dividend payments in the future, contingent on sustainable debt reduction and improved financial performance. The Sasol CEO also addressed concerns regarding free cash flow, acknowledging a deficit in the previous period but expressing confidence in generating positive cash flow in the upcoming months. Looking ahead, Baloyi emphasized the company's focus on generating free cash flow across all business segments to strengthen financial resilience and meet dividend obligations. He highlighted Sasol's commitment to renewable energy initiatives, positioning the company as a key player in the procurement of renewable energy in the region. With a robust strategy in place, Sasol aims to navigate macroeconomic challenges and capitalize on growth opportunities in the energy and chemical sectors.