World’s biggest liquid fuels producer sees profits plunge

South Africa's Sasol hammered by collapse in crude prices and rising costs, with writedowns adding to downward pressure.

The fuels major Sasol said full-year profit fell 17 per cent, after a sustained collapse in energy prices resulted in writedowns.

Profit before one-time items, known as headline earnings, declined to 25.3 billion rand (Dh6.61bn) in the year ended June 30, from 30.4bn rand a year earlier, said the Johannesburg-based company, the world’s biggest producer of liquid fuels. So-called diluted headline earnings per share were 41.40 rand, compared with a average estimate of 40.31 rand by 14 analysts in a Bloomberg survey.

The South African fuel producer reported remeasurement expenses totaling 12.9bn rand, citing the drop in energy prices. Sasol added an impairment of 9.9bn rand on its share in the Montney shale-gas properties in Canada, adding to a writedown of 7.4bn rand it took in December, as natural-gas prices dropped during the year. The average price of Brent crude, to which Sasol’s revenue is linked, was 41 percent lower than a year earlier, it said.

While Sasol has implemented programmes to conserve about 75bn rand of cash through 2018, the estimated cost of its Lake Charles chemical project in the United State has increased by almost 25 per cent to US$11bn.

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Published: September 12, 2016 04:00 AM