Sasol synthetic fuel plant in Secunda saw lower production volumes due to weaker demand in the six months to December 31 2025. Picture: Reuters
Sasol’s share price bubbled up 4.23% on the JSE even after the fuel-from-coal and chemicals group did not pay out an interim dividend and headline earnings per share (HEPS) slipped by nearly a third.
The group, in its results for the six months ending December 31, reported HEPS lower by 31% to R14.13 per share compared to the prior period. The share price was trading at R90.68 on the JSE on Monday morning, a price that was still 37.8% lower than the R143.25 at which it traded a year ago.
“We are committed to... enhancing operational performance and maintaining strict cost and capital discipline to unlock cash generation amid a challenging macro environment,” said Sasol’s President and CEO, Simon Baloyi in a statement.
Sasol reported its revenue fell 10% to R122.1 billion due to lower oil prices, shrinking refining margins, and a 5% decrease in sales volumes due to weak market demand. Additionally, there was a 13% decline in the average rand per barrel Brent crude oil price and a significant decline in refining margins and fuel price differentials.
The macroeconomic and operating environment were also challenging. Stringent cost and efficient capital management helped to offset this impact and improve free cash flow generation, said Baloyi.
Adjusted earnings before interest, tax, depreciation, and amortisation (Ebitda) of R23.9bn was 15% lower, mainly as a result of the lower revenue, while “stringent cost management” helped to mitigate the impact.
“Our International Chemicals business reset is progressing well, with our strategic initiatives driving margin and cost improvement, focusing on value over volume,” Baloyi said. The relative contribution from International Chemicals increased from 6% to 13%.
Earnings before interest and tax (EBIT) was 40% lower at R9.5bn and was impacted by non-cash adjustments, including a R6.2bn net loss from remeasurement items, compared to a R5.8bn net loss in the prior period, mainly due to further impairments of the Secunda liquid fuels refinery cash generating unit (CGU) of R5bn, and the Sasolburg liquid fuels refinery CGU of R600 million.
There were also unrealised losses of R100m on translation of monetary assets and liabilities, and the valuation of financial instruments and derivative contracts, compared to unrealised gains of R2.7bn previously.
“While we anticipate the overall business environment to remain challenging, we are implementing targeted self-help measures to mitigate this. In our Southern Africa business, our focus remains on addressing coal quality challenges,” said Baloyi.
“We have taken the Final Investment Decision for a destoning solution, with beneficial operation expected in the first half of financial year 2026, at a lower cost and earlier than previously communicated.”
Cash generated by operating activities increased 20% to R17.6bn. Capital expenditure amounted to R15bn, 6% lower than the prior period.
The results generated comments on social media, with, for instance, The Passive Income Guy (@hazelwood_dave) commenting that: “Boom! Sasol announces capex will drop to between R11bn and R16bn from a previous R25bn. This is a massive boost to free cash flow.”
Martin Rodgers (@SAValueinvestor) said: “Sasol not doing too much on their interim results this morning, currently up just under 2%. Results plagued with impairments and lower revenue/profits.”
Beyers Rossouw (@RossouwBeyers) commented: “Sasol: Risks and opportunities aplenty .. A balanced summary... Even at R13 HEPS for half a year and a conservative risk-adjusted PE of 5, the share price should be trading at R130.”
Sasol deposited R5.4bn on its revolving credit facility during the period. Net debt (excluding leases) was R81.8bn compared to R73.7bn at June 30, 2023, with the increase due to the aforementioned negative free cash flow.
“We have optimised our ERR (emission reduction roadmap) to deliver a more value-accretive pathway while still achieving our 30% greenhouse gas reduction target. This refined plan ensures air quality compliance, no turndown of Secunda volumes, lower capital, and leverages a broader suite of mitigation levers,” he said.
He said the board had passed the interim dividend to maintain financial flexibility and ensure further deleveraging.
“We remain focused on executing our business improvement plans to increase cash flow generation, deleverage the balance sheet, and build a resilient business,” he said.
BUSINESS REPORT
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