Sasol, the South African chemicals and energy giant, has released its first-half results, revealing a mixed bag of performance across its various divisions. While the company reported a slight decline in mining production, it saw a modest increase in natural gas output. However, the results were not without their challenges, with civil unrest in Mozambique and a fire at its Natref refinery impacting operations.
The six months ending December 31, 2024, proved to be a period of turbulence for Sasol. The company cited the civil unrest in Mozambique as a key factor contributing to a 3% sequential decline in second-quarter production. The disruption affected the Central Processing Facility (CPF), leading to reduced production rates throughout December. While Sasol reports that the situation at the CPF has since stabilized, with the unit now operating at full capacity, the company acknowledges that heightened near-term risks remain prevalent.
Adding to the operational challenges, a fire at Sasol’s Natref refinery further compounded the company’s woes. These combined incidents cast a shadow over the company’s mining and fuels divisions, despite positive performance in natural gas.
In its mining division, Sasol reported a 1% year-on-year decrease in saleable production for the first half of the year, totaling 15 million metric tons. This dip in production underscores the challenges faced by the company in maintaining consistent output amidst external disruptions.
Conversely, Sasol’s natural gas division provided a bright spot in the overall results. Despite the challenges posed by the Mozambican unrest, natural gas production saw a 2% increase compared to the same period last year, reaching 61.6 billion square cubic feet. This positive performance highlights the resilience of the gas division and its ability to weather operational storms.
Sasol’s fuels division, however, painted a less optimistic picture. Production volumes from its Secunda Operations, a crucial component of the fuels business, fell by 5% to 3.34 million tons. This decline reflects the impact of the operational challenges faced by the company during the period.
The chemicals division also experienced some headwinds, with total sales volumes falling by 6% to 2.98 million tons. Despite the lower sales volumes, revenue for the chemicals division saw a marginal 1% increase, reaching $3.82 billion. This was attributed to an 8% rise in the average sales basket price, which helped offset the impact of lower sales volumes.
Looking ahead, Sasol has reaffirmed its full-year guidance for its mining and gas divisions, signaling confidence in their ability to deliver on expectations. However, the company has adjusted its outlook for the fuels division. Due to the challenges faced by Secunda Operations and the Natref refinery, Sasol has revised its volume guidance downward. As a result, overall fuels sales volumes are now projected to be largely in line with the fiscal 2024 results, a more conservative estimate than previously anticipated.
The first-half results present a complex picture of Sasol’s performance. While the company demonstrated resilience in its natural gas division, it faced significant operational hurdles in mining and fuels, largely due to external factors. The adjusted guidance for the fuels division reflects the company’s pragmatic approach to managing expectations in the face of these challenges. Moving forward, Sasol will need to navigate the lingering risks in Mozambique and ensure the smooth operation of its key facilities to achieve its revised targets and deliver value to its stakeholders.