By Dineo Faku 
Aug 8, 2021
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PETROCHEMICALS giant Sasol closed stronger on the JSE after news of bumper earnings during its 2021 financial year aided by the recovery in chemical prices and higher oil prices.
The shares rose to a high of R224.65 in intraday trade on Friday on the JSE, later moderating to close 1.15percent up at R221.01.
The group, which operates the Secunda Synfuels in Mpumalanga, said it expected an increase of up to 49 percent in adjusted headline earnings before interest, tax, depreciation and amortisation (Ebidta) to a maximum of R52 billion from R35bn a year earlier, it said on Friday.
“This results from a strong recovery in chemical prices and a 4 percent increase in the rand per barrel price of Brent crude oil, partly offset by weather related events in both the US and South Africa impacting our gross margins adversely,” said Sasol.
The weather was a headwind for the group as the US chemical plants were rocked by two hurricanes and an Arctic winter storm resulting in a 300 000 ton impact on output during the year under review.
Sasol said adjusted Ebitda were supported by a strong cost performance through better than planned delivery of the $1bn (R14.63bn) comprehensive crisis response plan commitment, and on progress of its Sasol 2.0 initiative.
The group said non-cash adjustments before taxation for the period included unrealised gains of R10.3bn on the translation of monetary assets and liabilities and valuation of financial instruments.
The non-cash adjustment also included the remeasurement items of R23.2bn, mainly due to a R24.5bn impairment on the Synfuels refinery cash generating unit (CGU), and the R7.9bn impairment on the wax value chain, driven by higher liquified natural gas imports, gas costs in Mozambique and stronger forecaster rand/dollar exchange rate.
Sasol said the impairments were partly offset by a reversal of a prior year impairment of R4.9 bn relating to the US ethylene oxide cash generating unit (CGU) after the Ziegler alcohols unit reached beneficial operation in June 2020.
The group generated R2.2bn in net profit from the sale of its Air Separation Units in Secunda, it said.
Sasol also said it recorded a R3.4bn gain on the realisation of the foreign currency translation reserve, mainly on the sale of the 50 percent interest in the Lake Charles Chemical Project Base Chemicals Business to LyondellBasell, one of the largest plastics, chemicals and refining companies in the world.
The group expects earnings a share to jump by more than 100 percent to a maximum of R18 a share from a R14 8.49 a share loss a year earlier.
Headline earnings a share are likely to also climb by more than 100 percent to between R39 and R41 a share up from a R11.50 loss share, while core earnings a share are expected to be up to R30 a share from the previous year’s core headline earnings a share of R15.08.
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