Sasol (SSL) has released its production and sales metrics for the nine months ending March, showcasing the company’s efforts to navigate global economic pressures and geopolitical uncertainties. Despite these challenges, Sasol is relying on internal measures to protect free cash flow.
In its Southern Africa Energy and Chemicals division, Sasol is addressing coal quality issues impacting the Secunda Operations. The destoning project, aimed at improving coal quality, is on track for completion in the first half of fiscal year 2026, with costs expected to stay below R1 billion. Meanwhile, Sasol has chosen to reduce its coal production by approximately 2 million tons and purchase higher quality coal to maintain gasifier effectiveness until the destoning plant becomes operational.
Operational setbacks have affected production at Natref following a fire incident and an unplanned outage at Secunda, impacting sales volumes for fuels and South African chemicals. However, revenue in the International Chemicals division rose in the third quarter, driven by increased prices in America and Eurasia, despite a decline in sales volumes due to outages in the U.S.
Sasol has been proactive in improving its EBITDA, despite a tough business environment, and it recently secured renewed atmospheric emissions licenses for both Secunda and Natref. Additionally, the South African government's supportive stance on carbon tax policy offers a more stable investment climate. The company exited its U.S. Phenolics business in March, as part of a strategy to optimize assets and enhance competitiveness.
Sasol remains focused on maintaining liquidity and managing costs, bolstered by a comprehensive hedging program. The company's oil hedge strategies are nearing completion, offering protection for the balance sheet. Although fuel and chemical sales volumes are expected to decrease due to supply chain disruptions and global tariff issues, Sasol's financial metrics for FY25 are forecasted to align with guidance. Capital expenditure is projected to be at the lower end of expectations, ranging from R28 billion to R30 billion.
