Africa Oil & Gas: Sasol warns that power outages have dimmed its full-year earnings

Sasol facilities

Sasol’s earnings fell by up to 62% during its 2018 financial year, it warned shareholders in a trading statement on Friday morning.

The chemicals group is scheduled to release its results for the year to end-June on August 20.

The sharp drop in basic earnings is partly due to Sasol booking R11.8bn worth of once-off write-downs in its results.

Its headline earnings per share (HEPS), which exclude these once-off costs, will fall by up to 26%.

Sasol said Eskom outages and South Africans cutting back on fuel consumption had taken their toll on the company.

The group said it was impairing its “chlor vinyls cash generating unit” by R3.7bn. This was “as a result of the continued and sustained strengthening of the exchange rate outlook and the resulting impact on base chemicals margins”.

It is impairing its Mozambique gas partnership by R1.2bn. Sasol said this was “due to the weaker long-term macroeconomic assumptions, as well as a result of lower than expected oil volumes”.

During the first half of its financial year, Sasol impaired its Canadian shale gas project by an additional R2.8bn, and it scrapped its US gas-to-liquids project, booking a R1.1bn loss.

Implementing the Sasol Khanyisa empowerment scheme cost it R3bn during the financial year.

“Sasol is expected to deliver a resilient set of results, underpinned by higher sales and production volumes and much higher crude oil and product margins in the second half of the financial year,” its trading statement said.

“Our financial results were, however, negatively impacted by several unplanned Eskom electricity supply interruptions and two internal outages at our Secunda synfuels operations that resulted in lower production volumes.”

Sasol said its “performance chemicals” division managed to grow sales volumes by 1% despite Eskom’s electricity supply interruptions.

Its “base chemicals” division similarly grew sales volumes by 1% “excluding the impact of Eskom electricity supply interruptions”.source:BussinessDay

This site uses Akismet to reduce spam. Learn how your comment data is processed.