Sasol lifts headline earnings by 7 per cent

Sasol lifts headline earnings by 7 per cent

JOHANNESBURG – South Africa’s Sasol, the world’s biggest maker of fuels from coal, posted a seven per cent rise in first-half headline earnings per share and said it hopes to conclude the delayed sale its chemical unit by June.

Sasol also said yesterday that assuming lower oil and chemical prices and a stronger rand, it expected earnings in the second half to June falling below those of the first half, but still expected to raise overall earnings for the full financial year. “Satisfactory earnings growth for the full financial year is, however, expected,” Sasol said.Headline earning per share, the key profit measure for South African companies which excludes non-trading, capital and certain extraordinary items, rose to 12,03 rand for the six months to end-December, the group said.Sasol said profit rose from the comparable period of the prior year after an 11 per cent weakening of the rand against the dollar, and a nine per cent increase in the average-dated Brent crude oil price.Profits were dented by a total shutdown of Sasol’s Synfuels operations in September, output interruptions and lower sales.Sasol spent 6,1 billion rand on capital projects, of which 3,4 billion rand or 57 per cent was invested in South Africa.It said its 34 000-barrels-per-day Oryx gas-to-liquid (GTL) plant in Qatar would add to earnings in the second half.Shares in Sasol fell 2,17 per cent to 225 rand, in line with a 2,3 per cent dip in the blue chip Top-40 index, which tracked global stock markets lower.”The GTL business had grown in profit margins and markets, but the company is facing delays and cost pressures on various planned projects,” a Cape Town-based analyst said.”The second-half outlook is a bit of a downer, but their assumptions may turn out wrong and that could see earnings at least matching the first half, and I’m looking forward to the contribution of the Qatar plant,” the analyst added.CHEMICAL UNIT Sasol had hoped to sell its Olefins & Surfactants (O&S) chemical unit by last June, but the disposal has been delayed because of the complicated nature of the business and the negotiations, Chief Executive Officer Pat Davies told Reuters in a telephone interview.The operating profit of the unit fell in the first half due to depressed margins in the global detergent alcohol market.”Negotiations are on track, it is hard to put a time-line on the sale but we expect to wrap this up by June of this year,” he told Reuters.”So far we have three non-binding bids.”The sale was delayed as the unit was more integrated into Sasol than earlier expected and due diligence and negotiations had taken longer than expected, he added.Davies declined to comment on the nationality of the bidders, citing confidentiality agreements.Sasol is selling most of its O&S chemical unit, but will keep the unit’s South African business.In 2001, Sasol bought the chemical business then known as Condea from Germany’s RWE Dea for 1,3 billion euros, and most of this business is held in Sasol O&S in units located in Europe and the United States.Analysts have said Sasol may struggle to get buyers to fork out an amount anywhere near the price it paid for the business, but Sasol said the unit would only be sold at fair value.Nampa-Reuters”Satisfactory earnings growth for the full financial year is, however, expected,” Sasol said.Headline earning per share, the key profit measure for South African companies which excludes non-trading, capital and certain extraordinary items, rose to 12,03 rand for the six months to end-December, the group said.Sasol said profit rose from the comparable period of the prior year after an 11 per cent weakening of the rand against the dollar, and a nine per cent increase in the average-dated Brent crude oil price.Profits were dented by a total shutdown of Sasol’s Synfuels operations in September, output interruptions and lower sales.Sasol spent 6,1 billion rand on capital projects, of which 3,4 billion rand or 57 per cent was invested in South Africa.It said its 34 000-barrels-per-day Oryx gas-to-liquid (GTL) plant in Qatar would add to earnings in the second half.Shares in Sasol fell 2,17 per cent to 225 rand, in line with a 2,3 per cent dip in the blue chip Top-40 index, which tracked global stock markets lower.”The GTL business had grown in profit margins and markets, but the company is facing delays and cost pressures on various planned projects,” a Cape Town-based analyst said.”The second-half outlook is a bit of a downer, but their assumptions may turn out wrong and that could see earnings at least matching the first half, and I’m looking forward to the contribution of the Qatar plant,” the analyst added.CHEMICAL UNIT Sasol had hoped to sell its Olefins & Surfactants (O&S) chemical unit by last June, but the disposal has been delayed because of the complicated nature of the business and the negotiations, Chief Executive Officer Pat Davies told Reuters in a telephone interview.The operating profit of the unit fell in the first half due to depressed margins in the global detergent alcohol market.”Negotiations are on track, it is hard to put a time-line on the sale but we expect to wrap this up by June of this year,” he told Reuters.”So far we have three non-binding bids.”The sale was delayed as the unit was more integrated into Sasol than earlier expected and due diligence and negotiations had taken longer than expected, he added.Davies declined to comment on the nationality of the bidders, citing confidentiality agreements.Sasol is selling most of its O&S chemical unit, but will keep the unit’s South African business.In 2001, Sasol bought the chemical business then known as Condea from Germany’s RWE Dea for 1,3 billion euros, and most of this business is held in Sasol O&S in units located in Europe and the United States.Analysts have said Sasol may struggle to get buyers to fork out an amount anywhere near the price it paid for the business, but Sasol said the unit would only be sold at fair value.Nampa-Reuters

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