Table of Contents
Key Points:
- Sasol’s share price increased by over 5% following a 5% rise in coal export sales volumes for FY2024.
- Overall mining productivity was up 3% despite a 2% decline in saleable coal production due to strategic section reductions.
- Gas production in Mozambique rose 6%, while liquid fuels and chemicals sales faced challenges with declining volumes and prices.
South African energy and chemicals giant Sasol, under the leadership of CEO Simon Baloyi, experienced a notable rise in its share price following the announcement of increased coal export sales for the financial year ending June 30, 2024.
The company’s share price surged by more than five percent, reaching R143.91 ($7.84) in mid-morning trade on Monday, reflecting a positive market response to its latest performance metrics.
Increased coal exports and operational improvements
Sasol’s energy business reported a five-percent increase in coal export sales volumes, which played a significant role in the share price boost. This achievement is largely attributed to improved operations at Sasol’s Thubelisha colliery and enhanced performance from Transnet Freight Rail, the state-owned freight transport and logistics company. These operational improvements have been pivotal in enabling Sasol to meet higher demand and optimize its export logistics, despite some production setbacks.
The company’s overall mining productivity for the 2024 financial year was up by three-percent compared to the corresponding period in 2023. This increase in productivity underscores Sasol’s commitment to complex-wide initiatives aimed at enhancing performance across all its collieries. “We continue to focus on complex-wide initiatives across all collieries to improve mining’s overall performance,” the company noted in its production and sales metrics update.
However, the period under review saw a two-percent drop in saleable coal production. This decline was primarily due to a reduction in mining sections and increased discards from Sasol’s export beneficiation plant. The reduction in mining sections was part of a strategic move to merge sections, aimed at improving overall coal quality. While this resulted in a temporary dip in production, it is expected to yield long-term benefits in terms of product quality and operational efficiency.
Gas production and challenges in liquid fuels and chemicals
In addition to its coal operations, Sasol’s gas production in Mozambique increased by six percent for the 2024 financial year. This boost in production reflects Sasol’s strategic investments in its gas assets and its ability to leverage these resources to meet growing demand. In South Africa, natural gas and methane-rich gas sales volumes rose by four and seven percent respectively, driven by higher production and increased demand from external customers.
At its Secunda operations, where Sasol produces synthetic fuel and chemicals from coal, production volumes were up by one percent compared to the previous year. This modest increase was mainly due to a phased shutdown in FY2024, as opposed to a total shutdown in FY2023. The phased approach allowed Sasol to maintain production continuity while undertaking necessary maintenance and upgrades.
Despite these operational gains, Sasol faced challenges in its liquid fuels and chemicals businesses. Liquid fuels sales volumes for the 2024 financial year were 4% lower than the previous year, impacted by continued challenges in the South African diesel market and the planned optimization of inventory following low closing inventory levels in FY2023.
Furthermore, Sasol’s chemicals business saw an 11% decline in sales revenue from its South African operations. This drop was driven by lower prices, with the average sales basket price falling by 13 percent compared to FY2023. The decline in prices was attributed to lower oil prices and weaker global demand, which have affected the broader chemicals market.
Investor confidence and future believes
Despite the mixed results, the market has responded positively to Sasol’s increased coal exports and operational improvements. The rise in share price reflects investor confidence in Sasol’s resilience and strategic initiatives aimed at boosting productivity and efficiency across its operations. Sasol’s focus on enhancing operational performance, optimizing logistics, and strategic asset investments positions the company well for future growth and stability.
As Sasol continues to navigate the challenges in the energy and chemicals markets, its strategic initiatives and operational improvements will be crucial in sustaining its competitive edge and delivering value to its shareholders. The company’s ongoing efforts to optimize production, enhance product quality, and expand its export capabilities are expected to drive its long-term success in the dynamic global market.
