JOHANNESBURG – Petrochemicals giant Sasol lost 2 percent on the JSE in early trade yesterday on lower-than-expected interim profit.
The JSE-listed chemicals and energy company expects headline earnings to increase by between 12 and 29 percent in the half year to September on higher Brent crude prices, it said in its trading update yesterday.
“Sasol is expected to deliver a solid set of results, underpinned by higher Brent crude oil and product prices, a weaker average rand exchange rate, a satisfactory performance of its global assets and much lower remeasurement items during the six months ending December 31, 2018.”
It also expects underlying cash flow performance and earnings to be much stronger than the period ended December 31, 2017. However, an analyst, who declined to be named, said the share price was down amid disappointment on the headline earnings.
“Most people expected much higher headline earnings in the second half given that the rand was weaker,” the analyst said yesterday.
Sasol expects headline earnings a share to be in the range between R2.12 a share and R5.12 a share in the half-year ended September, compared to the R17.67 a share recorded in the half year to September 2017.
Earnings a share for the same period are expected in the R9.03 to R11.29 in comparison with R11.29 a share in the prior year.
Sasol previously said it was profitable and could generate free cash flows at oil prices of $40 a barrel.
The Brent crude oil price rose to between $66.02 and $77.18 a barrel, recovering from $56.15 a barrel in September last year.
However, the oil market is reversing the gains plunging to $53.54 a barrel yesterday – the cheapest since the closing price in October last year. Sasol said earnings before interest, tax, depreciation and amortisation were expected to increase by between 10 and 30 percent largely driven by stronger macroeconomics.
Sasol shares closed 1.40 percent lower at R431.50 on the JSE on Wednesday.