African Markets

‘significant’ coal scarcity will cost Sasol R5 billion in revenue.

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Coal supply difficulties affecting Sasol’s Secunda plant will cost the company up to R5 billion in earnings in the current fiscal year, the company informed investors.

In a call on Tuesday, the synthetic fuel and chemicals maker revealed that 600,000 tons of output cuts caused by a substantial coal scarcity will result in an R3 billion to R5 billion impact.

“This will have a significant impact on our earnings,” said Sasol CFO Paul Victor. “However, I want to caution that the volume cut is not linear.

There are cost items that move positively if the performance of the company is and we can also optimise in other areas.”

Sasol CEO Fleetwood Grobler stated that the group’s expected profits effect was a “quite realistic number.” “We have not included all of the conceivable upsides because we believe we need to demonstrate recovery before raising the upside,” he explained.

Earlier on Tuesday, Sasol informed the market that the coal supply concerns were expected to have an impact on production, and it lowered its forecasted volumes from its Secunda plant to 6.7 and 6.8 million tons, down from 7.3 to 7.4 million tons earlier.

Sasol manufactures synthetic fuels at Secunda using its world-leading coal-to-liquids technology. Sasol’s share price fell more than 7% in the afternoon trade on Tuesday, reaching R255 per share.

Sasol returned to profitability in 2021, following huge losses in the previous year that were linked to major Covid-19 disruptions, putting strain on the group’s balance sheet, which was already splayed by debt incurred for the disastrous Lake Charles Chemical Project, which ran $4 billion over budget.

Story by : Norvisi Mawunyegah