Sasol’s share price gained more than 3% yesterday morning after releasing an update indicating it has largely exceeded production guidance for its chemicals and energy products operations.
The Energy Business showed “notable improvements in operational and business performance in the second half of the year to June 30,” 2023 compared to the first half. Higher production volumes were reached at its Secunda operations due to operational stability and improved equipment reliability, as well as increased availability of natural gas. As a result, the upper end of its market guidance of 6.6 - 6.9mt was exceeded.
In the chemicals business, all three regional segments achieved sales volumes within guidance ranges. Sales volumes in the fourth quarter of the 2023 financial year increased 5% compared to the third quarter, with improved production and supply chain performance in Africa and America.
Demand in Europe and China, however, remained weak, which negatively impacted Eurasia sales volumes. Total sales volumes for the year to June 30 were 4% lower.
Chemicals sales volumes for 2023 were 1% lower. The average chemicals basket price fell 12%, with fourth quarter 2023 prices down 13% due to lower demand, when compared to the third quarter.
This, with higher feedstock and energy costs put downward pressure on overall chemical unit margins and profitability.
Sasol said continued pricing and demand volatility was expected as global market sentiment and petrochemical markets remain uncertain.
In South Africa, Sasol’s suppliers and customers faced business disruptions due to Eskom and Transnet challenges, as well as the spike in truck safety incidents.
“A coordinated effort, supported by Sasol, is underway with the South African government to assist both Eskom and Transnet to address the associated energy and supply chain constraints,” the group said.
In the energy business, there had been “notable improvements in operational and business performance” in the second half, underpinned by operational mitigation plans throughout the year.
“We are nearing the completion of the roll-out of the first phase of our full potential programme at the Syferfontein Colliery and have achieved incremental productivity improvements across our mining operations,” the group said.
The coal stockpile was maintained within targeted levels.
Initiatives to improve cutting time, reduce production losses and implement operational factors to improve coal quality remained a focus.
The drilling campaign in Mozambique was progressing successfully and resulted in an increase in well inventory from 19 to 24.
Also in Mozambique, construction was complete on the initial gas facility of the PSA project.
“Our exploration strategy resulted in a successful gas discovery in PT5-C, located in Southern Mozambique, providing closer integration to our existing facility.”
Export sales were 13% lower compared to the prior year. This was mainly due to ongoing operational challenges at Transnet Freight Rail and diversion of export coal.
For gas In Mozambique, production reached the upper end of market guidance range of 111 - 114 bscf.
In the group fuels business, production was 1% higher despite the planned total East factory shutdown. The fourth quarter saw an 8% production improvement compared over the third quarter mainly due to enhanced operational stability and equipment availability.
Natref saw an average run rate of 510 m³/h, within the guidance range of 500 m³/h - 530 m³/h, and 8% below the 2022 financial year.
Chemicals Africa sales revenue from the South African assets was 9% lower driven by lower prices offset by slightly higher volumes. Sales volumes were 1% higher, within the previous market guidance of 0 - 4%.
In Chemicals and Advanced Material, the average sales basket price was 10% lower, largely attributable to lower polymer and solvents prices resulting from lower oil prices, weaker global demand and associated inventory reduction by customers.
Chemicals America sales revenue from American assets was 8% lower, driven by lower prices and offset by higher volumes. Sales volumes were 9% higher, within the previous market guidance of 5 - 10%.
The higher sales volumes were mainly due to the planned ethylene cracker turnaround in 2022 and improved production performance from the Comonomers unit in the 2023 financial year.
At Chemicals Eurasia sales volumes fell by 19%, within the previous market guidance of as much as 20% lower than in the 2022 year.
BUSINESS REPORT