Bloomberg News

Sasol Profit Advances 25% on Cost Controls, Oil-Price Gains

September 12, 2011

(Updates with closing share price in seventh paragraph.)

Sept. 12 (Bloomberg) -- Sasol Ltd., the largest producer of motor fuels from coal, said fiscal full-year profit climbed 25 percent as oil prices rose and cost savings increased.

Net income advanced to 19.8 billion rand ($2.7 billion) in the year through June from 15.9 billion rand a year earlier, Johannesburg-based Sasol said today in a statement. Earnings per share gained 24 percent to 32.85 rand, missing the 33.65-rand average estimate of seven analysts surveyed by Bloomberg.

“Decisive management actions on operational efficiencies, cost control and business improvement plans have boosted the bottom line this year,” Chief Financial Officer Christine Ramon said in the statement. “Higher global commodity prices have supported the healthy margins delivered.”

Sasol has shifted investment into producing fuel from natural gas overseas, rather than from South African coal, boosting earnings as the local currency appreciates. Oil prices in New York rose 19 percent on average in the period to $89 a barrel, about twice the 9.6 percent gain in rand terms, according to data compiled by Bloomberg.

The company, which uses proprietary Fischer-Tropsch technology to make gasoline, diesel and jet fuel, halted a planned $10 billion joint venture in China in February because of delays in Chinese government approval.

Project Funding

Sasol has reallocated the funds it had earmarked for the venture to other projects in South Africa and abroad, it said today, without elaborating. The company remains committed to expanding its other businesses in China, it said.

Sasol fell 0.5 percent to 322.50 rand in Johannesburg trading at the 5 p.m. close.

The company’s international projects include a planned gas- to-liquids plant in Uzbekistan with partners Petroliam Nasional Bhd and state-run Uzbekneftegaz. It will decide in the “near term” whether to proceed with the front-end engineering and design for the facility, Sasol said.

It’s also studying the viability of a similar plant in western Canada, following its 14.2 billion-rand acquisition of two shale-gas assets in the country, Sasol said.

The company expects volumes from Canada and Mozambique to improve in the current fiscal year, it said in the statement, without elaborating. Sasol is targeting global synthetic-fuels output of 7.2 million metric tons to 7.3 million tons in 2012, it said.

“We remain on track to deliver on our expectations for an improved operational performance and to contain cost increases to within inflation,” Sasol said.

--Editors: Amanda Jordan, Tony Barrett

To contact the reporter on this story: Jana Marais in Johannesburg at jmarais@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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