Sasol Limited, a prominent player in South Africa’s energy and chemical sectors, has experienced notable fluctuations in its share price on the Johannesburg Stock Exchange (JSE) over the past year. As of February 26, 2025, Sasol’s share price stood at ZAC 8,578.00, reflecting a significant decline from its 52-week high of ZAC 17,380.00.
Financial Performance and Impairments
In the six months ending December 31, 2024, Sasol reported a 31% decrease in headline earnings per share (HEPS) to R14.13. This downturn was attributed to a 10% drop in revenue, amounting to R122.1 billion, influenced by lower oil prices, reduced refining margins, and a 5% decline in sales volumes due to weakened market demand.
A significant factor impacting Sasol’s financials was the R35.3 billion impairment on its Secunda liquid fuels plant. This writedown resulted from revised cost assumptions and a projected decrease in production, aligning with the company’s strategy to reduce emissions by 30% by 2030 through increased reliance on natural gas over coal.
Operational Challenges
Sasol’s operations have been adversely affected by challenges faced by South Africa’s state-owned enterprises. Disruptions in Transnet’s rail network and frequent power outages from Eskom have constrained supply chains and sales volumes. These operational hurdles have contributed to a decline in basic earnings per share by up to 84% for the financial year ending June 30, 2024.
Environmental and Regulatory Pressures
Environmental concerns have also weighed heavily on Sasol. The Secunda facility is recognized as one of the largest single sources of greenhouse gas emissions globally. Efforts to obtain exemptions from upcoming sulfur-dioxide emissions limits were unsuccessful, necessitating substantial investments to meet regulatory standards. Over the past five years, Sasol has invested R7 billion to reduce emissions and is exploring alternative energy sources, including green hydrogen and renewable energy, to power its operations.
Leadership Changes
The company has seen a series of leadership changes, with the resignation of key executives, including the Chief Financial Officer and Executive Vice President of the Energy Business. These departures have raised concerns about the company’s strategic direction and stability during a period of financial and operational challenges.
Market Outlook
Despite these challenges, Sasol remains committed to enhancing operational performance and maintaining strict cost and capital discipline to unlock cash generation amid a challenging macro environment. The company’s focus on deleveraging and optimizing operations is aimed at navigating the current economic landscape and positioning itself for future growth.
Investors are advised to monitor Sasol’s ongoing efforts to address environmental concerns, operational challenges, and leadership transitions, as these factors are likely to influence the company’s share performance on the JSE in the coming months.