Sasol warns of profit decline as it battles falling oil price
Embattled chemicals group Sasol, whose share price has fallen by almost three quarters so far in 2020, said on Friday it expects profits for its year to end-June to fall by at least a fifth as it feels the effect of a declining oil price.
Sasol produces oil from coal, and prices of fuel have plummeted in 2020 due to a combination of a price war between Russia and Saudi Arabia and plummeting demand due to the Covid-19 outbreak.
Headline earnings per share (Heps) are expected to decrease by at least 20%, compared with Heps of R30.72 reported for the year to the end of June 2019, the group said. Heps is a widely used profit measure in SA that excludes once off items to give a better indication of underlying performance.
Sasol is expected to issue a more detailed trading update in coming weeks.
Cost overruns at the group’s Lake Charles project in the US and an explosion at that facility earlier in the year are also putting pressure on the group.
In morning trade on Friday Sasol’s share price was 5.54% lower at R79.50, putting it on track for its worst one-day performance in more than two weeks.
At the same time Brent crude was 5.18% lower at $31.08 a barrel, having fallen almost 50% so far in 2020.