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Major South African company in deep trouble written by Bianke Neethling
Sasol’s finances continue to deteriorate as the gas and petrochemical giant faces a low oil price and declining sales volumes.
The company released its results for the last six months of 2024 on Monday, 24 January 2025, which revealed a weak performance.
Sasol is one of South Africa’s largest employers and arguably one of the country’s most important companies.
However, it has faced operational difficulties and declining prices for its products over the past year.
In its latest interim results, Sasol’s revenue declined by 10%, largely due to a lower oil price and a drop in sales volumes.
The average rand price for a barrel of oil declined by 13% in the last six months of 2024, leading to a significant decrease in Sasol’s refining margins and fuel price differentials.
In addition, the company reported a 5% decrease in sales volumes due to lower production and lower market demand.
Sasol’s basic earnings per share declined significantly from 15.19 cents in 2023 to 7.22 cents – a 53% decrease.
Headline earnings per share decreased by 31% to R14.13 per share compared to the prior period
The company’s total comprehensive income for the six months was R4.77 billion, down 28% from the comparative period.
Sasol attributed its decline in earnings to impairments at its Secunda and Sasolburg operations.
The company made a net loss of R6.2 billion from remeasurement items compared to a net loss of R5.8 billion in the prior period.
It said this was mainly due to further impairments of its Secunda liquid fuels refinery cash-generating unit (CGU) of R5.0 billion and the Sasolburg liquid fuels refinery CGU of R0.6 billion.
In addition, the company had unrealised losses of R0.1 billion on the translation of monetary assets and liabilities.
Sasol said its overall results were impacted by a “challenging macroeconomic and operating environment”.
It said stringent cost and efficient capital management helped to offset the impact and improve free cash flow generation.
Sasol’s cash generated by operating activities increased by 20% to R17.6 billion, mainly due to changes in working capital. However, the company said its free cash flow remains negative at a deficit of R1.1 billion.
The company also made a debt in its debt. At the end of 2024, Sasol’s total debt stood at R116.9 billion, down from R117.7 billion in mid-2024.
Unfortunately, the company’s net debt, excluding leases, increased from R73.7 billion to R81.8 billion due to its negative free cash flow.
It is also due to its negative free cash flow that Sasol’s board did not declare an interim dividend for this period.
source:Major South African company in deep trouble – Daily Investor
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