Sasol in its half year interim results says it delivered a good set of results for the six months ended 31 December 2020, its earnings increased by more than 100% to R15,3 billion from R4,5 billion in the prior period.
Despite a 23% decrease in the rand/barrel oil price, Sasol’s adjusted EBITDA decreased by only 6%. This achievement is as a result of a strong cash cost, working capital and capital expenditure performance in response to the challenging environment.
Sasol earnings were positively impacted by the following non-cash adjustments:
- Gains of R4,6 billion on the translation of monetary assets and liabilities due to a 15% strengthening of the closing rand/US dollar exchange rate compared to June 2020;
- Gains of R5,0 billion on the valuation of financial instruments and derivative contracts; and
- R3,3 billion gain on the realisation of the foreign currency translation reserve (FCTR), mainly on the divestment of 50% interest in the US LCCP Base Chemicals business.
The key metrics were as follows:
- Working capital ratio of 14,9% compared to 14,6% for the prior period. Investment in working capital was R27,3 billion;
- Capital expenditure of R7,5 billion;
- Normalised cash fixed reduced by 10% (R3,2 billion) compared to the prior period;
- Profit before interest and tax (EBIT) of R21,7 billion compared to R9,9 billion in the prior period;
- Adjusted EBITDA declined by 6% from R19,8 billion in the prior period to R18,6 billion.
At 31 December 2020 Sasol’s total debt was R126,3 billion compared to R189,7 billion as at 30 June 2020. During the period, Sasol utilised proceeds from its asset divestments to repay the US Dollar syndicated loan, as well as a portion of its Revolving credit facility, reducing its US dollar denominated debt by almost R28 billion (US$2 billion) to R121 billion (US$8,2 billion).
Through our comprehensive response plan and planned asset divestments, Sasol intends to further reduce its net debt to achieve a Net debt: EBITDA ratio of less than 2,0 times and gearing of 30% by 2023.
Sasol gearing decreased from 114,5% at 30 June 2020 to 76% at 31 December 2020 mainly due to repayment of US dollar debt (20%) and a stronger closing Rand/US dollar exchange rate (7%).