With Sasol’s headline earnings figure already in the market following a trading update last week, investors will be looking at other corporate issues including growth, cost and cash management, when the company releases its full year results on Tuesday.
“The average Brent price in rand terms has increased almost 38% to approximately R399/barrel over the 12 months, which should see good performance from their fuels business,” said Natasha Narsingh, fund manager and mining analyst at Metropolitan Asset Managers in Cape Town.
She added that the gas business should benefit from both price and volume increases, while a margin squeeze was expected from the chemicals business.
Last week on Tuesday in a trading statement, Sasol announced an expected increase in headline earnings per share for the year to end-June of between 30%-35% and an earnings per share increase of between 5%-10% following the R2,8-billion write-down of a division that the company is trying to sell.
According to the I-Net Bridge consensus, analysts expect full year, fully diluted headline earnings of R21,78 per share and a dividend of R6,60 per share.
Johan De Kok, a fund manager and mining analyst at Cadiz, told I-Net Bridge that updates on the company’s growth strategies in both gas-to- liquids (GTL) and coal-to-liquids (CTL) would be looked at.
More specifically, De Kok said progress, targets and lead times in new ventures such as the group’s first GTL plant in Qatar would be studied.
“I will be watching for cost performance in the synthetic area and a progress report on their GTL and CTL projects,” said Narsingh.
In June, Sasol held the inauguration ceremony of its Oryx GTL plant in Qatar. The $1-billion project has a capacity of 34 000 barrels per day and is a 51:49 joint venture between state-owned Qatar Petroleum and Sasol Synfuels International.
De Kok said just a few months delay could have a significant effect on the returns of a project.
Sasol also announced last week that it had received indicative bids for its Olefins & Surfactants (O&S) business earlier this year and added that the company’s gearing would benefit from eventual cash proceeds.
De Kok said he would also want to see what the company intended doing with its cash balance before and after the sale of O&S.
Already Sasol has called a shareholder meeting for October requesting a cancellation of shares held in treasury, which would give it the capacity to buy back more shares in future. – I-Net Bridge