Continued operational and safety challenges in Sasol’s coal business has negatively impacted the group’s production and sales performance as well as its outlook for the rest of the year, the synfuels and chemicals group has warned.
In a trading statement released on Thursday, Sasol said it experienced several operational challenges in October and November in its Secunda coal value chain which has negatively impacted production and sales volume performance in the second quarter of its 2023 financial year, as well as the outlook for the remainder of the financial year.
The major production impacts at Secunda include “proactive” safety and operational stoppages initiated mostly by Sasol’s own employees and the regulator; continued challenges on coal quality; and unprecedented rainfall which flooded a coal processing unit and resulted in a factory outage for several days.
As a result of the myriad challenges, Sasol has adjusted market guidance and now expects Secunda Operations to produce volumes of between 6.6 million tons and 6.9 million tons, down from previous guidance of between 7 million tons and 7.2 million tons. Liquid fuels sales volumes have been revised to between 52 million and 55 million barrels, compared with previous guidance of 53 million to 56 million barrels.
Sasol said it will maintain its focus on safely improving productivity and coal quality through a safety remediation plan and ongoing interventions.
Despite these challenges, as well as a downturn in chemical sales prices and higher chemical feedstock prices at Sasol’s international operations, the group expects earnings per share and headline earnings per share to increase by more than 20% in the six months ended in December compared to the same period in 2021.
This results from the favourable impact of the higher Brent crude oil price, refining margins and a weaker rand dollar exchange rate.
Earnings may however be impacted further by adjustments resulting from the 2023 financial half year closure process, “as well as the valuation of the statement of financial position at 31 December 2022 based on external market indicators which cannot be estimated reliably at this point in time,” Sasol said.
Sasol will release half-year financial results in February 2023.