Sasol ‘showing consistent progress’ – Baloyi

The first six months of Sasol’s 2026 financial year did not go badly.

Unfortunately, the period did not go that well either.

Read:
Sasol profit plunges on oil-price drop, R7.8bn writedown
Sasol earnings plunge 95% as impairments hammer profitability

Simon Baloyi, president and chief executive officer, says the group is “showing consistent progress” in the implementation of strategic initiatives to set Sasol on a better path as has been promised to shareholders several times over the last few years.

“This is strengthening our foundation business, helping us to mitigate ongoing global market volatility and macroeconomic headwinds, and building resilience for the future,” he told investors and analysts during a briefing of the chemical and energy group’s results for the six months to end December.

He also mentioned improvements in most of the divisions within Sasol.

However, every improvement seems to have been countered by something negative to dull the net advancement.

Sasol announced in its results that it made good progress on its key strategic priorities aimed at strengthening the foundation business, including restoring the SA value chain and enhancing the competitiveness of its large international chemicals business.

“During the period, operational performance improved in SA, supported by better coal quality following the achievement of beneficial operation of the de-stoning plant in December as well as higher overall SA production volumes,” it says.

“In international chemicals, the reset initiatives including the asset mothballing and closure programme progressed to plan, partially mitigating macro pressures. Savings across the group were achieved through the continued execution of cost optimisation initiatives, while prudent capital spend contributed to improved cash flow generation.”

However, it adds that the operating environment remained challenging. Oil and chemicals markets softened during the period, compounded by a stronger exchange rate.

Read:
Rand strengthens below R16/$ for first time since 2022
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The exchange rate improved from an average of R17.94 per dollar a year ago to R17.38 in the six months to December, and then even more in 2026. Oil and chemical prices remained subdued.

Pushing forward but being held back

While Baloyi celebrates improved refining margins and higher sales volumes in many divisions, he says the improvements were “insufficient” to offset macroeconomic headwinds – and other challenges – in most of the businesses.

• Coal quality improved in the mining division, but lower export volumes led to a decrease of 7% in earnings before interest and tax. Sasol still had to purchase coal from other miners to feed its synfuels plants.
• The gas division reported mixed results, with higher production from one part of the business offset by a further decline in production from Mozambique where gas fields are in a declining stage.
• The synfuel assets had a strong six months with higher production from the Secunda plant, the Natref refinery seeing sales increasing sharply, and earnings before income and tax increasing by more than 100%. However, results were impacted by revaluation of assets to the tune of R3,1 billion. Lower rand oil prices also impacted the numbers.
• The African chemicals division benefitted from higher sales volumes, but the improvement was offset by weaker prices. This led to a loss before interest and tax.
• The American chemical interests (primarily the huge Lake Charles plant) reported higher sales, but lower margins. The dollar basket price decreased by 14% due to lower ethylene pricing and changes in product mix.

Listen: Sasol declares force majeure on natural gas supply

Challenging environment

Walt Bruns, chief financial officer, notes in remarks to shareholders that adjusted earnings before interest, tax, depreciation and amortisation (adjusted Ebitda) amounted to R21 billion in the first six months.

“It is 12% lower compared to the prior period, mainly as a result of the challenging macro environment,” he says.

“This was offset by the increase in sales volumes, and a reduction in costs achieved through disciplined cost management initiatives. Earnings before interest and tax (ebit) of R4,6 billion is 52% lower than the prior period and was impacted by non-cash adjustments.

“Basic earnings per share decreased by 95% to 38 cents per share and headline earnings per share decreased by 34% to R9,27 per share compared to the prior period,” says Bruns.

Sasol is still on tightrope as far as its balance sheet is concerned.

Bruns says the focus is still on reducing debt. While cash generated by operating activities decreased, net free cash flow increased due to lower capital expenditure.

Total debt decreased to R93,5 billion ($5,6 billion) compared to R103,3 billion ($5,8 billion) at the end of June 2025.

Still, Sasol had to forego a dividend. A dividend is only possible if net debt (excluding leases) is less than $3 billion. The net debt excluding leases amounted to $3.8 billion at end December.

Share price

Shareholders are apparently happy with the overall trajectory. Sasol is cheap and has been cheap for years based on almost every valuation matrix.

Investors are still rooting for their team, hoping that this is its year.

At R141, the share price is closing in on its 12-month high of R149. It advanced 62% over the past 12 months and has chalked up a gain of around 33% since the beginning of 2026.

It is noteworthy that many specialist unit trusts have increased their exposure to Sasol during the last year or so. At certain instances, Sasol elicited quite a hefty exposure by respected fund managers.

Read: Why is Sasol at such a deep discount to fair value?

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