Business

Sasol interim profit rises 26%

Paul Burkhardt

Sasol will issue a record interim dividend following a first-half profit rise of 26%.

Sasol. (Planet KB)

Sasol Ltd, the biggest producer of liquid fuels from coal, said first-half profit rose 26% as a weaker rand countered a R5.3-billion writedown in the value of its Canadian gas assets.

Earnings excluding one-time items climbed to R18.4-billion, or R30.19 in the six months through December, from R14.5-billion, or R24.01 a share, a year earlier, the Johannesburg-based company said on Monday in a statement. It will pay a record interim dividend of R8 a share, a 40% increase from a year earlier.

Sasol, whose expenses are mostly in rand, said it's benefiting from the currency's decline against the dollar. The rand traded at an average of 10.07 to the dollar in the first half, 16% weaker than a year earlier. The company plans to save R3-billion from cost cuts in the next two to three years.

"We are moving full steam ahead to go live with our new operating model, which will drive streamlined management structures, cost-effective processes and meaningful savings,” chief executive David Constable, said in the statement. The cost of implementing the enhancement program will be about R1.2-billion in this financial year, the company said.

Synthetic fuels
Sasol uses its own technology to make gasoline, diesel and jet fuel from the coal it mines in South Africa and from gas pumped off Qatar. It also owns shale-gas assets in Canada, where it wrote down the value of its Montney properties after partner Talisman Energy agreed to sell part of its share for $1.3-billion in December, Sasol said on February 14.

Production from Sasol's synthetic-fuels unit rose 3% to 3.7-million metric tonnes in the first half from a year earlier. The east factory had a shutdown in September, the largest yet at the unit, which saw an additional 36 000 people on site. Synfuels volumes are forecast at 7.3-million tonnes to 7.5-million tonnes for the year.

Sasol plans to make a final investment decision this year for an ethane cracker project in Westlake, Louisiana, and a gas- to-liquids, or GTL, plant at the site 18 to 24 months after. The company will also decide on plans for a polyethylene plant in the US this year, it said.

The company needs to raise $5-billion to $7-billion to build the cracker, which will convert ethane natural gas to ethylene, used to produce raw materials for goods such as paint and detergents, and start up in 2017, Constable said on September 9. The GTL plant would be the first of its kind in the US and may cost as much as $14-billion.

A design study has been extended for a GTL plant in Uzbekistan and Sasol is looking for a partner for its 19% stake in the project, it said in the statement.

"The rand-dollar exchange rate remains one of the biggest external factors impacting our profitability and we expect a slight strengthening from its current levels,” Sasol said. – Bloomberg

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