JOHANNESBURG: Petrochemicals Company Sasol reported a 6% rise in first-half earnings after higher sales and chemical prices helped offset the impact of falling oil prices.
The company said headline earnings per share rose to R32, the middle of the range it flagged to the market. Sasol also cuts its interim dividend by 12.5%, a move it had previously signalled, to save cash in a volatile environment.
Sasol, the world’s top maker of motor fuel from coal, said it had changed its progressive dividend policy to a more fluid payout based on headline earnings. It declared an interim dividend of R7 per share.
“They didn’t want to make the first reduction to the dividend too aggressive because they wanted to give the market a bit more confidence,” said Nedbank Capital analyst Mohamed Kharva.
Sasol shares rose 1% to R400 on Monday but they have lost about 36% of their value from all-time highs in June 2014.
The company said it expected various initiatives to result in savings of R4bn ($332m) “by financial year 2016 off a 2013 cost base”.
Sasol, which makes about 40% of its earnings from oil, said it expects the average Brent crude oil price to be at least 30% lower in the second half of its financial year compared to the first.
Brent crude fell 19% in the reporting period.
The weakness of the rand boosted profit as the company pays its costs in rands while selling its products in dollars.
Brent crude oil, in oversupply, fell to $59 a barrel on Monday. But it rose by almost a third between January and February on the back of Middle East supply disruptions, strong winter demand and high refinery margins.
