Sasol Forecasts Earnings Slump as Commodity Prices Retreat

The Johannesburg-based company attributed the downturn primarily to a 17% decline in the average South African rand price per barrel of Brent crude oil. This was compounded by a 3% dip in the global dollar-per-ton chemicals basket price, creating a challenging environment for Sasol’s core business segments. Further pressure came from 7.8 billion rand ($485.2 million) in pre-tax impairments, which the company disclosed in its latest trading update.

Financial Outlook and Operational Offsets

Sasol expects its adjusted EBITDA for the first half to land between 19 billion and 23 billion rand. This represents a contraction of 4% to 21% compared to the 24 billion rand reported in the same period last year. However, the company noted that the earnings slide was partially mitigated by a more than 100% surge in refining margins and a 3% increase in sales volumes, which management attributed to improved operational performance across its facilities.

Looking ahead, the group anticipates a stronger position regarding liquidity. Despite the earnings pressure, Sasol expects free cash flow generation to improve relative to the previous year, primarily as a result of disciplined reductions in capital expenditure.