Sasol HY HEPS drop 34% on weak oil, chemical prices

Sasol, a leading petrochemicals and energy group, recently announced a significant drop in profits by more than a third during the first six months of the fiscal year. The company's interim dividend was also slashed by around 71%, reflecting a challenging period marked by weak oil prices, unstable demand, and continued cost pressures. Despite these hurdles, Sasol's CEO, Fleetwood Grobler, remains optimistic about the company's future prospects. Grobler discussed the company's performance and future outlook in an interview with CNBC Africa's Fifi Peters. One of the key points highlighted by Grobler was the impact of pricing pressures on Sasol's various business segments. The company experienced a significant decline in fuel prices, with a 59% drop on a competitive basis. This decline, coupled with cost increases related to electricity and maintenance, squeezed margins and affected profitability. Similarly, Sasol faced pricing headwinds in its chemicals business, impacting overall performance. Grobler emphasized the company's focus on controlling costs and enhancing operational efficiency to unlock free cash flow. Another crucial aspect of the discussion was Sasol's efforts to address challenges in the US operations. Despite encountering difficulties in the past, particularly with the commercial ramp-up of its facilities, Grobler expressed confidence in the world-class nature of the plant. He highlighted the completion of major projects within budget and schedule, signaling progress in improving operational efficiency. Grobler acknowledged the volatile market conditions but remained positive about Sasol's ability to capitalize on opportunities as demand recovers. Furthermore, Grobler addressed concerns regarding the impact of geopolitical events, such as tensions in the Middle East, on oil prices. While acknowledging the uncertainty surrounding these events, Grobler emphasized the importance of monitoring supply and demand dynamics to navigate future market trends effectively. He also discussed the pricing trends in gas and coal markets, noting the potential impact of economic recovery, particularly in China, on energy demand. Reflecting on his tenure as CEO of Sasol, Grobler highlighted the challenges faced by the company, including regulatory pressures, market volatility, and decarbonization efforts. Despite the stock price decline over the past five years, Grobler expressed satisfaction with the strategic decisions made during his tenure, such as delivering key projects, managing the company through the COVID-19 pandemic, and advancing decarbonization initiatives. Grobler expressed confidence in Sasol's leadership team and resilience to overcome challenges, projecting a brighter future for the company in the coming years. In conclusion, Sasol's half-year performance reflects the broader challenges facing the energy and petrochemicals industry amid global turbulence. Despite headwinds in pricing and market conditions, Sasol remains committed to driving operational efficiency, cost management, and strategic growth initiatives under the leadership of Fleetwood Grobler.