Sasol Limited

FY26 adjusted EBITDA increased 17% to ZAR 61 billion, gross margin increased 13%, sales volumes increased 4%, and cash fixed costs remained broadly flat despite inflation. Free cash flow was ZAR 11.9 billion, 5% lower year over year, but up 26% excluding the prior year’s once-off Transnet benefit. Capex was ZAR 21 billion, down 18%, and net debt fell 11% to USD 3.3 billion; available liquidity increased 21% to about USD 5 billion. Southern African oil breakeven improved to $49 per barrel, and International Chemicals adjusted EBITDA was USD 604 million. For FY27, management said capital guidance is lower again, with a cumulative capital reduction of about ZAR 12 billion to ZAR 14 billion versus Capital Markets Day ranges. Guidance also includes FY27 International Chemicals adjusted EBITDA of USD 450 million to USD 600 million, while working capital should unwind partly in Q1 FY27 and net debt remains on track to move below USD 3 billion between FY27 and FY28.

Simon Baloyi framed FY26 as a year of turning commitments into delivery and said Sasol has become stronger, more resilient, and more competitive. He emphasized delivery on the foundation business: improved reliability, stronger coal quality, better gasifier performance, lower breakeven, and more than 500 MW of renewables brought online in South Africa. His tone was confident but not complacent, repeatedly saying the business is not yet where it wants to be and that FY27 priorities remain focused on safety, operational excellence, commercial excellence, cost efficiency, cash generation, and disciplined capital allocation.

Walt Bruns highlighted that FY26 showed meaningful progress against the capital allocation framework: sustainable free cash flow, deleveraging, disciplined capital spend, and eventual dividend readiness. He cited net debt of USD 3.3 billion, down 11%, and available liquidity of about USD 5 billion, while noting the balance sheet is in one of its strongest positions in years. He also explained that capex was ZAR 21 billion, 18% lower, with FY27 guidance implying another ZAR 12 billion to ZAR 14 billion cumulative reduction versus CMD ranges, and that working capital was the main cash conversion headwind, though part should unwind in Q1 FY27.

Analysts focused on working capital, breakeven, coal purchases, gasifier availability, refining margins, chemicals guidance, Rhine River risk, Brunsbüttel margins, PSA reserves, Mozambique PT5C, credit ratings, and capex cuts. Management said breakeven includes all costs, including capex, variable costs, and cash fixed costs, and the $49 per barrel result included about $6 to $9 per barrel of macro benefit from the absence of a Secunda shutdown and Middle East conflict effects. They said working capital rose mainly from pricing, Prax/Natref capacity use, and volumes, and should unwind in inventory during Q1 FY27; coal purchases are planned to drop from 8.8 million tonnes in FY26 to 5 million to 7 million tonnes in FY27. On chemicals, management said FY27 guidance is lower because the Middle East tailwind will not repeat, while on credit ratings they said the strong balance sheet should help, but the sovereign rating still constrains them.