Bloomberg News

Sasol Boosts Profitability in Third Quarter on Costs, Output

June 14, 2011

(Updates with CFO comments from second paragraph.)

June 14 (Bloomberg) -- Sasol Ltd., the largest producer of motor fuels from coal, increased profitability last quarter on higher commodity prices, curbs on costs and increased output, while the company expects “solid” full-year results.

“Sasol’s profitability has improved further in the third quarter,” Chief Financial Officer Christine Ramon said today in a statement. “Robust global commodity prices have countered the impact of the strong rand, supporting healthy margins.”

The company, the largest by sales and market value in South Africa, will invest 23 billion rand ($3.4 billion) this year and 31 billion rand in 2012 on current projects and acquisitions of assets to benefit from surging fuel prices. Crude oil prices have increased 32 percent in the past year.

“Sasol is well positioned to deliver solid financial and operational results for the full financial year,” Ramon said.

The producer rose 1.2 percent to 350.30 rand by 12:16 p.m. in Johannesburg, bringing gains in the past year to 28 percent.

Sasol produced 1.9 million metric tons of synthetic fuel last quarter, bringing the total for the first nine months of its fiscal year to 5.3 million tons. The company expects output to reach 7.1 million tons in the full year, just short of a previous 7.2 million ton target. A maintenance outage at its South African coal-to-fuels plant curbed first-half output.

Feasibility Study

Sasol, together with Malaysia’s Petroliam Nasional Bhd and Uzbekistan’s Uzbekneftegaz, are studying the feasibility of building a 38,000-barrel-a-day gas-to-fuels plant in Uzbekistan. Petronas, which has a one-third stake in the project, intends to reduce its share to 11 percent, Ramon said.

“We expect to make a decision on the next phase of the project in the second half of the 2011 calendar year,” she said. “Securing project finance and currency convertibility will be key criteria.” Sasol and Tata Group are also deciding whether to build a 90,000-barrel-a-day plant that will produce motor fuel from coal in India’s eastern state of Orissa.

Margins on chemical products increased “significantly” in the third quarter, with international polymer and solvent prices up 15 percent in dollar terms from the first half, Ramon said.

--Editors: Tony Barrett, Dan Weeks

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Andrew Barden at barden@bloomberg.net


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