Sasol Says $3 Billion of Impairments Will Hit Its Earnings: South Africa

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Sasol Says $3 Billion of Impairments Will Hit Its Earnings: South Africa

Loveworld / 9 mins

August 12, 2024

2 min read

South African fuel and chemical manufacturer Sasol Ltd. has disclosed that impairments totaling 55.1 billion rand (approximately $3 billion) will significantly impact its full-year earnings. The Johannesburg-based company reported on Monday that it expects its basic loss per share for the year ending June 30 to range between 68.82 rand and 71.48 rand, a stark contrast to a profit of 14 rand per share recorded in the previous year.
The substantial impairments primarily reflect a 45.5 billion rand write-down on its Chemicals America ethane value-chain unit. This adjustment is attributed to prolonged market softness and weaker pricing outlooks. Additionally, Sasol has written down 3.9 billion rand on its polyethylene, chlor-alkali, polyvinyl chloride, and wax value chains in its Africa chemicals business. The Secunda liquid-fuels refinery in South Africa also experienced a 5.7 billion rand impairment.
Earlier this year, Sasol, which produces liquid fuels from coal, reported various operational issues within its South African facilities. As a result, the company’s headline earnings per share are anticipated to fall within the range of 12.28 rand to 21.95 rand, representing a potential drop of up to 77% from the previous year. Analysts surveyed by Bloomberg had estimated an average headline earnings per share of 40.86 rand.
The impairments and reduced earnings underscore the challenges facing Sasol as it navigates difficult market conditions and operational hurdles.