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Sasol Limited (SSL) has disclosed its audited financial results for the year ending June 30, 2024, revealing significant challenges due to adverse market conditions. The company reported a turnover of R275.1 billion, marking a 5% decline compared to the previous year. This decrease was driven by ongoing pressure from constrained margins and depressed chemicals prices, which were only partially mitigated by a stronger rand oil price, improved refining margins, reduced total costs, and higher sales volumes.
Sasol experienced a loss before interest and tax (LBIT) of R27.3 billion for the fiscal year, a sharp contrast to the earnings before interest and tax (EBIT) of R21.5 billion recorded in the prior year. This substantial decline was attributed to several factors, including increased asset impairments, lower earnings before interest, tax, depreciation, and amortization, translation losses, and diminished derivative gains.
The financial results were significantly impacted by an impairment loss of R56.7 billion net of tax (R74.9 billion gross). The impairments were concentrated in several key areas:
- Chemicals America Ethane Value Chain: This segment, which includes Alcohols, Alumina, Ethylene Oxide, Ethylene Glycol, and associated shared assets, faced an impairment of R45.5 billion net of tax (R58.9 billion gross). The impairments were largely driven by persistent weaker market pricing and a subdued outlook for these products.
- Chemicals Africa Value Chains: An impairment of R3.9 billion net of tax (R5.3 billion gross) was recorded for the Polyethylene, Chlor-Alkali & Polyvinyl Chloride, and South African Wax value chains. Notably, the Polyethylene CGU was further impaired due to oversupply and reduced demand globally. The South African Wax value chain remains fully impaired.
- Secunda Liquid Fuels Refinery: This segment faced an impairment of R5.7 billion net of tax (R7.8 billion gross) and remains fully impaired as of June 30, 2024.
For context, the previous fiscal year had impairments totaling R33.7 billion (gross), primarily related to the Secunda liquid fuels refinery CGU, South African Wax value chain, and other assets, with some impairments being reversed.
Despite these challenges, Sasol's operational performance showed improvement in the fourth quarter, contributing to a more robust performance in the latter half of the year. The company continues to navigate a complex market environment while striving to enhance its financial stability and operational efficiency.
