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business|coal|energy|financial|gas|mining|petrochemicals|refining|equipment|operations

Macroeconomic factors dampen Sasol’s year-to-date performance

23rd April 2024

By: Marleny Arnoldi

Deputy Editor Online

     

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NYSE- and JSE-listed petrochemicals company Sasol says its energy business benefitted from higher basic fuel prices, as well as improved refining margins towards the end of the nine months ended March 31, which helped to offset operational headwinds at the group’s mining and Secunda operations.

Sasol’s mining productivity has improved albeit at a slower pace than expected. The group expects to meet the lower end of its coal productivity guidance range of between 975 t and 1 100 t per continuous miner per shift for the full-year ending on June 30.

The group continues to implement a full potential programme across its coal mines.

At the Secunda operations, production volumes increased in the reporting nine months, compared with the nine months ended March 31, 2023, but volumes were impacted on by operational disruptions towards the end of the period.

Consequently, Sasol expects its production volumes from the Secunda operations to range between 6.9-million and 7.1-million tonnes for the full-year.

In the chemicals business, Sasol’s product prices continue to be subdued, with the average sales basket price for the reporting period being 20% lower compared with the prior corresponding period, owing to lower oil, feedstock and energy prices, as well as weaker market demand in China and Europe.

While prices improved towards the end of the reporting period, Sasol says its margins and profitability remain under pressure in the chemicals business.

Sasol is managing its production rates and inventory at several chemical units in response to lower demand, while implementing strict cost and capital management measures.

In respect of the last quarter of the 2024 financial year, ending June 30, Sasol expects macroeconomic volatility to persist, including geopolitical risks that negatively impact on the company’s performance.

Particularly, fuel demand is poised to remain at similar levels in the last quarter of the year and Sasol says it is proactively managing the risk of market oversupply.

The company is confident that chemicals pricing and demand will slowly recover in key markets, partly owing to increasing oil prices.

MINING PERFORMANCE

Sasol’s mining productivity was 4% higher in the reporting nine months as a result of its full potential programme.

Notably, Sasol has completed improvements at the Thubelisha and Shondoni collieries, while a final phase of improvements is underway at the Impumelelo colliery.

Sasol produced 22.6-million tonnes of saleable coal in the nine months under review, compared with 22.9-million tonnes in the prior comparable period.

GAS PRODUCTION

Sasol posted an 8% increase in gas production in Mozambique in the reporting period, owing to four additional wells coming online during the prior financial year.

However, production in the March quarter was 3% lower year-on-year owing to lower demand from Sasol’s downstream operations.

Sasol expects to meet the upper end of its gas guidance for the year, which is set at between 113-billion and 119-billion standard cubic feet, following production of 89.7-billion standard cubic feet in the reporting nine months.

FUELS

Production volumes from the Secunda operations were 3% higher year-on-year in the reporting period, which was impacted by a 9% decrease in volumes in the March quarter owing to reduced overall equipment availability and operational instability.

Sasol expects its production volumes for the full-year to be between 6.9-million and 7.1-million tons, which is lower than its original guidance of 7-million to 7.3-million tons.

Liquid fuel sales were flat compared with the prior corresponding period despite continued oversupply in the South African diesel market.

The sales outlook for the year remains in line with Sasol’s previous guidance of between 51-million and 54-million barrels.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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