Sasol Limited

For the first half of FY26, Sasol said gross margin declined 6% and EBIT fell 52%, mainly because of non-cash remeasurement items and impairments. The company reported group adjusted EBITDA was lower year over year, but free cash flow was positive; management highlighted that as the first positive first-half free cash flow in 4 years and more than a 100% improvement from the prior period. Reported impairments included ZAR 7.8 billion in total, versus ZAR 5.7 billion a year earlier, with ZAR 3.0 billion on Secunda liquid fuels, ZAR 3.9 billion on Mozambique/PSA gas development, and ZAR 0.5 billion on the CTT equity-accounted investment. Capital expenditure was 43% lower year over year, and full-year capex guidance was cut by ZAR 2 billion to ZAR 22 billion to ZAR 24 billion. Management guided to net debt below USD 3.7 billion by year-end, and revised International Chemicals full-year adjusted EBITDA guidance to USD 375 million to USD 450 million with margin guidance of 8% to 10%.

Simon Baloyi emphasized that the strategy is unchanged: strengthen the foundation business while growing and transforming over time. His tone was cautious but constructive, stressing that execution is improving despite a volatile environment. He highlighted progress on safety, coal quality, Secunda stability, renewable energy additions, and a pragmatic, value-accretive decarbonization approach rather than growth for its own sake.

Walt Bruns focused on control of costs, capital, hedging, and deleveraging. He said cash fixed costs fell 2% in H1, capex was 43% lower year over year, and the company revised full-year capex guidance to ZAR 22 billion to ZAR 24 billion after a ZAR 2 billion reduction. He also noted liquidity headroom of more than USD 4 billion, gross debt 9% lower than the prior year, and net debt of USD 3.8 billion, with confidence in getting below USD 3.7 billion by year-end. On hedging, he said H2 oil exposure is hedged at 55% to 60% with an average floor of about USD 59/bbl, and 25% to 30% of rand-dollar exposure is covered via zero-cost collars around ZAR 18 to ZAR 22.

Analysts pressed management on whether Secunda volumes could beat guidance, why gas guidance and PSA-related impairments were revised, and how the stronger rand and lower chemicals prices affect de-gearing. Management said Secunda is progressing well but they are sticking with guidance until the gasifier restoration program is further along; Victor Bester said 25% of the gasifier fleet has been seen so far and 40% is expected by year-end. On gas, management said the PSA impairment was driven by the stronger rand and delayed gas flow, while lower guidance also reflects weaker external demand, more gas from Secunda displacing natural gas, and some Mozambique-related issues. On capital allocation, Walt Bruns said the company bought almost USD 0.5 billion and paid it into the RCF, used cash to repay a smaller ZAR 800 million DMTN, and is staying proactive on upcoming maturities.