Sasol Limited

Sasol did not disclose a single consolidated revenue figure in the call, but it said group adjusted EBITDA was lower year on year, gross margin declined by 6%, and EBIT decreased by 52%. Free cash flow was positive, and management said this was the first positive first-half free cash flow in 4 years and represented more than a 100% improvement versus the prior period. Reported impairments totaled ZAR 7.8 billion versus ZAR 5.7 billion a year ago, including ZAR 3 billion on the Secunda liquid fuels refinery CGU, ZAR 3.9 billion on Mozambique/PSA gas development, and ZAR 0.5 billion on the CTT equity-accounted investment. On guidance, International Chemicals full-year adjusted EBITDA guidance was revised from USD 375 million to USD 450 million, margin guidance was revised to 8% to 10%, full-year capex guidance was cut to ZAR 22 billion to ZAR 24 billion, and net debt is still expected to end the year below USD 3.7 billion.

Simon Baloyi framed the quarter as evidence that Sasol is delivering on the parts of the strategy it can control: safety, reliability, cash flow, and portfolio reset. He said the destoning plant came on plan, Secunda volumes and coal quality are improving, renewable energy additions are progressing, and the company is acting pragmatically on carbon, gas, and growth projects. His tone was cautious but constructive: he repeatedly said the macro is tough, but that the company is “delivering against most” of its commitments and will stay focused on value-accretive execution rather than aspirational growth.

Walt Bruns emphasized that the macro backdrop remained difficult, with Brent down 14% year on year, rand oil price down 17%, and chemicals still under pressure from overcapacity and weak demand. Financially, he highlighted 3% higher sales volumes, a 2% reduction in cash fixed cost, capex 43% lower year on year, positive first-half free cash flow, and a 6% decline in gross margin. He also said liquidity headroom remained robust at more than USD 4 billion, gross debt ended 9% lower year on year, and net debt of USD 3.8 billion remains on track to fall below USD 3.7 billion by year-end. He added that current U.S. dollar borrowing costs are more attractive than 6 to 12 months ago, with longer bonds trading below 9% yield, and that the company is proactively managing maturities and its debt currency mix.

Analysts pressed on whether Secunda volumes are running ahead of guidance, with management saying the current run-rate looks strong but it is too early to revise guidance before the gasifier restoration program is further along. Questions also focused on the carbon tax proposal, the MRG gas pricing submission, and the revised International Chemicals outlook; management said carbon tax should be designed with a recycling mechanism, MRG pricing will likely be slightly above current gas costs but Capex is not significant, and the FY28 chemicals target remains intact because about two-thirds of the uplift is expected from self-help measures. On balance sheet and capex, management said second-half capex will be higher because of project phasing and mining investments, not because of deferred spend, and that the stronger rand helps the balance sheet even if it hurts earnings. There was also detailed discussion of the PSA/CTT gas timing, Prax’s business rescue and Natref capacity access, and the working-capital unwind expected in the second half.