- Revenue: Not explicitly mentioned in the transcript.
- Adjusted EBITDA: Decreased by 9% compared to the prior year.
- Cash Generated by Operations: Decreased by 19% compared to the prior year.
- Cash Fixed Costs: Increased by 1%, but decreased by approximately 5% excluding inflation and exchange rate movements.
- Capital Spend: ZAR30 billion, decreased by 2% compared to the prior year.
- Free Cash Flow: Decreased by 60% compared to the prior year, but improved from a negative ZAR6 billion in the first half to a positive ZAR8 billion by the end of the financial year.
- Dividend: Full year dividend of ZAR2 per share; no final dividend declared for the period.
- Impairment: ZAR46 billion net of tax in the Chemicals Americas segment.
- Mining Business: 4% decline in adjusted EBITDA due to lower export coal prices and higher external coal purchase prices.
- Gas Business: 6% decline in adjusted EBITDA due to lower weighted average gas prices.
- Fuel Segment: 7% decline in adjusted EBITDA due to lower sales volumes and lower differentials on diesel.
- Chemicals Africa: 31% decrease in adjusted EBITDA due to lower dollar-based sales prices.
- Chemicals America: Adjusted EBITDA increased by more than 100% to approximately ZAR3.5 billion.
- Chemicals Eurasia: 19% increase in adjusted EBITDA due to higher sales volumes and lower margins driven by lower energy and feedstock costs.
- Sasol 2.0 Transformation Program: Delivered a cumulative total of ZAR16 billion of EBITDA enhancements by FY 2024, targeting an additional ZAR2 billion to ZAR4 billion in FY 2025.
- Capital Expenditure for FY 2025: Forecasted to be between ZAR28 billion and ZAR30 billion.
Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sasol Ltd (SSL, Financial) achieved operational improvements in the fourth quarter, leading to increased production and sales volumes compared to FY 2023.
- The company's mining full potential program is nearing completion, resulting in productivity gains.
- Sasol Ltd (SSL) reached a significant milestone in Mozambique with early gas flow from the PSA initial gas facility.
- The Sasol Rewards loyalty program has grown to 1.8 million subscribers, boosting retail fuel sales performance.
- The company successfully concluded its appeal related to clause 12A of the minimum emission standards in South Africa, allowing for the implementation of a solution to reduce sulfur dioxide emissions from April 1, 2025.
Negative Points
- Sasol Ltd (SSL) experienced five tragic fatalities in FY 2024, highlighting ongoing safety concerns.
- The company's financial results were impacted by a range of factors, including operational issues and a challenging macro environment.
- Cash generation and profitability decreased significantly compared to the prior year, with adjusted EBITDA and cash generated by operations down by 9% and 19%, respectively.
- The Chemicals Americas segment faced a substantial impairment of ZAR46 billion net of tax due to a weaker outlook for the value chain and higher discount rates.
- The Board decided to pass on the final dividend for FY 2024, bringing the full-year dividend to ZAR2 per share, reflecting a cautious approach to financial resilience.
Q & A Highlights
Q: What has caused these impairments, which led to the losses experienced by the group? Are you considering a full exit from Chemicals America?
A: The impairments were triggered by a significant decline in long-term pricing for ethane, ethylene, and polyethylene, as well as higher discount rates. There is no current plan for a full exit from Chemicals America; the impairments relate to the assessment of the asset base and not an indication of selling or restructuring the portfolio. (Hanre Rossouw, CFO)
Q: Could you talk about what's going on in the Chems Americas segment? Are there any issues specific to the portfolio or assets that are driving this disconnect?
A: The utilization of our cracker is on par with peers, but demand in downstream units is below expectations. We are intervening to rationalize costs and improve performance. (Simon Baloyi, CEO)
Q: How does the management team plan to respond to the issue of gas depletion expected in the next few years?
A: We have extended gas supply from Mozambique to mid-2027 and are working on projects that could extend it further. We are also engaging with customers to transition to LNG, which will take three to four years to build the necessary infrastructure. (Simon Baloyi, CEO; Christian Herrmann, EVP Marketing and Sales)
Q: Can you give more color on the asset review? Would you include our CCP as part of that potential sale review?
A: We will continuously review the CCP and other assets, focusing on timing and market conditions. The review will include a global assessment of our international chemicals portfolio, taking decisive actions on underperforming assets. (Simon Baloyi, CEO; Antje Gerber, EVP International Chemicals)
Q: What is the expected gas price increase for South African gas users for the transition to LNG?
A: Current regulated gas prices are between $3 and $3.5 per gigajoule. Transitioning to LNG could increase prices to around $12 to $13 per gigajoule, based on global benchmarks. (Simon Baloyi, CEO)
Q: Could you elaborate on the medium-term plans around capital spending levels after 2025?
A: We expect capital expenditure to moderate after 2025, with a focus on sustaining safety and reliability of assets. We will only approve projects that offer returns above the weighted average cost of capital. (Hanre Rossouw, CFO)
Q: What is the status of the Competition Commission appeal process?
A: We have closed the appeal process regarding the jurisdiction issue and are preparing to respond to allegations of excessive pricing. The Competition Appeal Court has indicated that NASA's influence on pricing will be considered in our defense. (Vuyo Kahla, EVP Strategy, Sustainability and Integrated Services)
Q: In a world of lower chemical prices for longer, gas drying up, and production potentially lower at Secunda, do you think a ZAR3 billion to ZAR4 billion long-term debt target is sufficient or suitable?
A: We see the ZAR4 billion net debt target as the upper end of our risk tolerance. We aim to achieve lower gearing ratios in the long term and will provide updated targets at our Capital Markets Day. (Hanre Rossouw, CFO)
Q: Can you provide an update on the destoning project, including CapEx cost and timeline?
A: We will take FID on the destoning project before the end of the calendar year, with full implementation expected by FY 2027. The project aims to improve coal quality to meet the required standards for Secunda operations. (Simon Baloyi, CEO)
Q: Are you considering technologies like carbon capture at your facilities and converting this to carbon products?
A: We are working on a pilot program in Leandra to investigate carbon capture and storage. This is part of our longer-term outlook for decarbonization. (Simon Baloyi, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
