JOHANNESBURG - The the world’s biggest producer of fuel from coal, said its Secunda synfuels operations posted record full-year output, even as a stronger rand and a recession-hit South African economy curbed profit.
Headline earnings, which exclude one-time items, declined by between 11 percent and 21 percent during the 12 months through June 30, the Johannesburg-based company said in a statement Tuesday. That equates to profit per share range of 32.71 rand ($2.52) to 36.85 rand, compared with the 34.45 rand median estimate of 12 analysts surveyed by Bloomberg. Sasol’s stock rose the most in four months.
Sasol benefits when the rand is weaker because most of its products are sold in dollars, while its costs are mainly in the South African currency. The rand strengthened by 11 percent against the dollar over the 12-month period. Co-Chief Executive Officer Bongani Nqwababa said in February that the company had hedged 30 million barrels of oil at $47 a barrel for the rest of the year, but didn’t have currency-related protections in place.
“Continued volatility in the macroeconomic environment, particularly the stronger rand and low oil price, has adversely impacted our financial performance,” Sasol said.
Sasol’s Secunda synfuels operations increased production by 1 percent to a record 7.83 million tons. Total liquid fuels sales volumes fell by 2 percent as a higher portion was allocated to the company’s chemical business and output dropped at the Natref refinery, where units were affected by an explosion in May.
Sasol shares climbed as much as 4 percent in Johannesburg trading, the most since March 31, and were 3.9 percent higher at 386.50 rand as of 10:05 a.m. local time.
A strike over wages and benefits at the company’s coal-mining operations in the first half of the financial year also impacted results.
BUSINESS REPORT ONLINE