JOHANNESBURG, Dec. 1, 2022
/PRNewswire/ --
TRADING STATEMENT FOR THE SIX MONTHS ENDING 31 DECEMBER 2022
Sasol shareholders are advised that for the six months ending
31 December 2022 (2023 financial half
year) earnings per share (EPS) and headline earnings per share
(HEPS) are expected to increase by more than 20%, compared to EPS
of R23,98 and HEPS of R15,21 reported for the six months ended
31 December 2021 (the comparative
period).
We continue to see the favourable impact of the higher Brent
crude oil price, refining margins and weaker Rand / US Dollar
exchange rate on our gross margins. These benefits were partly
offset by the downturn in chemical sales prices and higher chemical
feedstock prices in our international operations.
EPS and HEPS may be impacted further by adjustments resulting
from the 2023 financial half year closure process, as well as the
valuation of the statement of financial position at 31 December 2022 based on external market
indicators which cannot be estimated reliably at this point in
time.
A comprehensive trading statement will be published as soon as
there is more certainty with respect to the ranges of the increase
in EPS and HEPS.
The financial information on which this trading statement is
based has not been reviewed and reported on by the Company's
external auditors.
Sasol will release its 2023 half year financial results on
Tuesday, 21 February 2023.
UPDATE ON OPERATIONS
Background
Shareholders are referred to Sasol's announcement published on
the Stock Exchange News Service on 20
October 2022 relating to the production and sales
performance metrics for the three months ended 30 September 2022.
Following this update, we experienced several operational
challenges in October and November
2022 in our Secunda coal value chain. Collectively, these
factors have negatively impacted our production and sales volume
performance in quarter 2 of the 2023 financial year, as well as the
outlook for the remainder of the financial year.
Below is a summary of the major production impacts:
- The continued challenges on coal quality are significant to our
operations, together with other factors which are listed below,
impacting on our coal blending and Secunda Operations (SO)
production volumes.
- Productivity at Mining was significantly impacted by proactive
safety and operational stoppages initiated mostly by our own
employees and the regulator, to ensure we maintain a safe working
environment. Our ability to offset lower productivity through
external coal purchases, was constrained by the continued
underperformance of the contracted Isibonelo coal supply as well as
other suppliers whose production was impacted by loadshedding and
higher rainfall. Our coal stockpile is being actively managed to
maximise throughput to SO, with our current stockpile at
approximately 2.2 million tons at 29
November 2022.
- At SO, we experienced an unprecedented rainfall incident in
November 2022 which caused flooding
of the west coal processing unit and resulted in a factory outage
for several days. In the restart of the plant, we also experienced
unplanned outages on the reforming units. We are faced with
prolonged downtime on 2 of 17 reformers, which are expected back
online before the end of the 2023 financial year. The continued
challenges with coal quality have impacted gasifier availability,
and although we took decisive action to improve equipment
availability, a further deterioration of coal quality during
October and November 2022 has
impacted production.
- The impact of lower production from Secunda has a direct impact
on the downstream chemicals value chains in South Africa. Sasol's force majeure on the
local supply and export of certain chemicals products was largely
lifted at the beginning of November
2022 with the end of the Transnet strike action in
October 2022. Unfortunately, a
shortage of rail cars resulted in the declaration of force majeure
on the local supply of ammonia again in November 2022.
- On an encouraging note, we have seen positive results from our
infill well drilling campaign in Mozambique. We exceeded our internal volume
plan to date and are reviewing opportunities to minimise the impact
of coal-related production losses. The strong performance is also
carried through in the extension of the gas plateau. A further
opportunity exists to increase gas supply to the downstream units
to the extent possible from January
2023.
- Operations in our international businesses continue to deliver
steady performance despite challenging macro-economic conditions.
Good progress has been made to address the following recent
production outages:
- In our Chemicals America segment, the investigation into the
Ziegler unit fire was completed. The root cause relates to
turnaround maintenance activities. Preventative actions to mitigate
against a future occurrence have been identified and are in the
process of being implemented. We have been able to restart alcohol
production at 50 percent utilisation during November while
isolating the damaged section for repairs. The timeline to resuming
full production rates is dependent on completion of the repair work
which is expected by the end of quarter 3 in financial year 2023,
subject to delivery of equipment. Due to the fire's impact on
production, Sasol declared force majeure on the supply of U.S.
Ziegler alcohols and derivative products in October 2022. The force majeure will be lifted as
soon as production rates and inventory levels improve. Our sales
volume guidance for Chemicals America remains intact at 5 - 10%
higher than prior year.
- Repair work is nearing completion on Air Separation Unit 2 at
ORYX GTL in Qatar following the
fire in June 2022. The facility
continues to maintain stable operations at 60% capacity. Our
previous market guidance of 70%-80% utilisation remains intact for
financial year 2023.
Update to market guidance
As a result of the aforementioned challenges, the market
guidance mainly associated with our Southern African value chain,
is revised as follows:
- Mining productivity of 950 – 1 050 t/cm/s, lower than previous
guidance of 1 000 – 1 100 t/cm/s;
- Gas production of 111 – 114 billion standard cubic feet, higher
than the previous guidance of 109 – 112 billion standard cubic
feet;
- Secunda Operations production volumes of 6,6 – 6,9 million
tons, lower than previous guidance of 7,0 – 7,2 million tons;
- Liquid fuels sales volumes of 52 – 55 million barrels, lower
than previous guidance of 53 – 56 million barrels; and
- Chemicals Africa sales volumes
of 0 – 4% higher than prior year, which is lower than previous
guidance of 6 – 12% higher than prior year.
The market guidance in other areas remain unchanged from that
reported in our production and sales performance metrics
announcement of 20 October 2022.
Actions going forward
The safety of our employees remains our top priority. We
maintain our focus on safely improving productivity and coal
quality at our Mining business, through our safety remediation plan
and ongoing interventions.
Furthermore, we are embarking on the following interventions at
our Mining and SO facility, in pursuit of safe, stable and
sustainable operations:
- The focus on the controllable factors within our own Mining
operations will continue in our pursuit of targeted productivity
and quality levels;
- We are enhancing our coal blending through more focussed
purchases of higher quality coal from external suppliers to
supplement our own production;
- Given the heightened risk associated with the rainy season in
South Africa, we have taken
proactive measures at our Secunda site to reduce the risk of
flooding;
- Restoration of the reforming units will be prioritised to
ensure that we can maximise use of any available natural gas in the
remainder of financial year 2023 to maximise production; and
- Opportunities to optimise the production slate between fuels
and chemicals will be balanced against market demand and
contractual commitments, in the context of the ongoing challenges
with the Transnet-related supply chain movement of products.
A further update on our production and sales volume outlook will
be provided in January 2023 when we
publish our quarterly business performance metrics.
The President and Chief Executive Officer, together with some
members of the executive management team will host a conference
call on Thursday, 1 December 2022 via
webcast at 12:00 (SA time) to answer questions related to this
announcement.
Live conference call links:
Webcast: https://www.corpcam.com/SasolMC
Or via teleconference:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9496716&linkSecurityString=14c4539040
For further information, please contact:
Sasol Investor Relations,
Tiffany Sydow, Investor Relations
Officer
Telephone: +27 (0) 71 673 1929
investor.relations@sasol.com
Disclaimer - Forward-looking statements
Sasol may, in this document, make certain statements that are
not historical facts and relate to analyses and other information
which are based on forecasts of future results and estimates of
amounts not yet determinable. These statements may also relate to
our future prospects, expectations, developments, and business
strategies. Examples of such forward-looking statements include,
but are not limited to, the impact of the novel coronavirus
(COVID-19) pandemic, and measures taken in response, on Sasol's
business, results of operations, markets, employees, financial
condition and liquidity; the effectiveness of any actions taken by
Sasol to address or limit any impact of COVID-19 on its business;
the capital cost of our projects and the timing of project
milestones; our ability to obtain financing to meet the funding
requirements of our capital investment programme, as well as to
fund our ongoing business activities and to pay dividends;
statements regarding our future results of operations and financial
condition, and regarding future economic performance including cost
containment, cash conservation programmes and business optimisation
initiatives; recent and proposed accounting pronouncements and
their impact on our future results of operations and financial
condition; our business strategy, performance outlook, plans,
objectives or goals; statements regarding future competition,
volume growth and changes in market share in the industries and
markets for our products; our existing or anticipated investments,
acquisitions of new businesses or the disposal of existing
businesses, including estimates or projection of internal rates of
return and future profitability; our estimated oil, gas and coal
reserves; the probable future outcome of litigation, legislative,
regulatory and fiscal developments, including statements regarding
our ability to comply with future laws and regulations; future
fluctuations in refining margins and crude oil, natural gas and
petroleum and chemical product prices; the demand, pricing and
cyclicality of oil, gas and petrochemical product prices; changes
in the fuel and gas pricing mechanisms in South Africa and their effects on prices, our
operating results and profitability; statements regarding future
fluctuations in exchange and interest rates and changes in credit
ratings; total shareholder return; our current or future products
and anticipated customer demand for these products; assumptions
relating to macroeconomics; climate change impacts and our climate
change strategies, our development of sustainability within our
Energy and Chemicals Businesses, our energy efficiency improvement,
carbon and GHG emission reduction targets, our net zero carbon
emissions ambition and future low-carbon initiatives, including
relating to green hydrogen and sustainable aviation fuel; our
estimated carbon tax liability; cyber security; and statements of
assumptions underlying such statements. Words such as "believe",
"anticipate", "expect", "intend", "seek", "will", "plan", "could",
"may", "endeavour", "target", "forecast" and "project" and similar
expressions are intended to identify forward-looking statements but
are not the exclusive means of identifying such statements. By
their very nature, forward-looking statements involve inherent
risks and uncertainties, both general and specific, and there are
risks that the predictions, forecasts, projections, and other
forward-looking statements will not be achieved. If one or more of
these risks materialise, or should underlying assumptions prove
incorrect, our actual results may differ materially from those
anticipated. You should understand that a number of important
factors could cause actual results to differ materially from the
plans, objectives, expectations, estimates and intentions expressed
in such forward-looking statements. These factors and others are
discussed more fully in our most recent annual report on Form 20-F
filed on 31 August 2022 and in other
filings with the United States Securities and Exchange Commission.
The list of factors discussed therein is not exhaustive; when
relying on forward-looking statements to make investment decisions,
you should carefully consider foregoing factors and other
uncertainties and events, and you should not place undue reliance
on forward-looking statements. Forward-looking statements apply
only as of the date on which they are made, and we do not undertake
any obligation to update or revise any of them, whether as a result
of new information, future events or otherwise.
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SOURCE Sasol Limited