Confident signs from Sasol
Posted on 08. Mar, 2010 by admin in Business-Financial Results, Uncategorized
Petrochemicals giant Sasol has sent a clear sign that it believes the worst of the global economic recession is behind us when it raised its interim dividend by 12%.
The company released its interim results on Monday but tempered its outlook for the sector saying: “Taking into account, however, the continuing challenging economic conditions and our assumptions in respect of crude oil and product prices, tight refining margins as well as the stronger rand/US dollar exchange rate, we remain cautious in our outlook for the full year compared with 2009.”
Key numbers for investors include:
- Headline earnings per share decreased by 51% to R10,67
- Interim dividend increased by 12% to R2,80 per share
- Operating profit of R10,5 billion declined by 51%
- Cash flow generation by operating activities down 70% to R9,2 billion
Operating profit was negatively impacted by lower average crude oil prices (average dated Brent was US$71,42/barrel in 2009 compared with US$84,75/barrel in 2008) and chemical product prices, as well as a 14% stronger average rand/US dollar exchange rate (R7,64/US$ in 2009 compared with R8,88/US$ in 2008). The average oil price achieved during the prior year comparable period was positively impacted by the effect of the oil hedges which resulted in a net gain of R5,1 billion.
The company said it had not entered into similar oil hedges in the current trading year.
Key projects
Sasol management outlined some of its key projects for the year including:
Developments in the sustainable development area including:
- In November 2009, we signed a memorandum of understanding with Gassnova SF, a Norwegian state-owned enterprise responsible for managing carbon capture and storage (CCS), which will allow us to explore the possibilityof becoming a participant in the European CO2 Technology Centre Mongstad, currently under construction in Norway.
Developments on the project front include:
- In December 2009, the Project Application Report for the China coal-to-liquids (CTL) plant was submitted to the Chinese Government for approval. Applications will also be submitted for the mines and catalyst plantsrequired for the project during the 2010 calendar year.
In line with the strategy to acquire natural gas assets for potential GTL feedstock, progress has been made in three areas:
- In November 2009, SPI acquired exploration rights for two offshore licenses in Mozambique adjacent to the offshore Block 16/19, namely Sofala and M-10 in which SPI holds participating interests of 100% and 50%, respectively. Success in these areas will allow for the possible development of the entire area, including Block 16/19.
- In December 2009, SPI signed a Farm-in Agreement with Finder Exploration Pty Limited for a 45% participating interest in Block AC/P 52 situated in the gas-rich Browse Basin of the North Western Shelf of Australia. This transaction was approved by the Australian Governmentin January 2010.
- SPI submitted a joint application with Statoil ASA and Chesapeake Energy Corporation, in November 2009, for an onshore petroleum exploration right in the Karoo Basin in the central region of SouthAfrica. The application, for the proposed exploration of shale gas resources, is expected to take about 12 months to process.
- In South Africa, coal blasting and extraction of the 170 000 ton sampleof coal on Project Mafutha (a proposed greenfields CTL facility) commenced in November 2009. Coal gasification trials are planned for the middle of the 2010 calendar year. The cost thereof is included in the R1 billion already committed for the pre-feasibility study.
- Sasol Wax will invest R8,4 billion to double hard wax production at our Sasolburg facilities in South Africa. The first phase of this project, which will increase capacity by about 40%, will come into operation during the 2012 calendar year. Completion of the second phase is expectedin the 2014 calendar year.
- Sasol Solvents commenced basic engineering for the first commercialinstallation of its tetramerisation technology in the United States. The initial commercial unit will have a combined capacity of 100 000 tons perannum of 1-octene and 1-hexene which are co-monomers used in the plastics industry. Construction is expected to begin in the 2011 calendar year.