Sasol Ltd results review

The key highlights for Sasol’s results for the year ending on the 30th of June 2016.

Sasol Ltd (-)
  • Record operational volumes from Secunda Synfuels Operations
  • Sustainable actual cost savings of R4,5bn
  • R28bn cash savings delivered for the year, R12bn above the 2016 target
  • Lake Charles project 50% complete
  • HEPS down 17% to R41,40 despite average decline of 25% in Rand oil prices
  • Normalised cash fixed costs down 8,1% in real terms
  • Dividend of R9,10 per share, 21% lower than the previous year.

Courtesy of SENS

Given the external pressures from global oil prices, the company performed well in delivering on high production volumes and cost saving initiatives, importantly still delivering a dividend to shareholders. The company is driving the completion of projects in Texas, Mozambique and South Africa to enhance additional cash flows whilst spending R135bn over the next two years in Southern Africa alone. Lake Charles has exceeded its expected budget to $11bn and Mozambique continues to be a focal point for oil and gas drilling. The Canadian exploration operating losses continued to be a thorn in the side of the international business with a R9,9bn impairment.

The share price action has done little to stimulate traders looking for further upside in Sasol with a trading range between 36000c and 38500c firmly in place. The influence of the USD/ZAR and the forthcoming OPEC meeting may have material effects on the share price and shareholders will be hoping for a production freeze closer to $50/barrel. A positive takeaway may be that of the rising strength in the Stochastic oscillator as it turned around from oversold territory. Volume in the last three days has been strong and may denote some accumulation around the current support levels. Whilst trading may be sluggish, investors with a more long term view may favour the cost saving initiatives, dividend payment and forthcoming project delivery as a light at the end of the pipeline.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.