Sasol Limited · JSE:SOL
Sasol — H1 FY2018 Earnings Presentation
23 slides from Sasol's earnings presentation, February 2018
Slide 1: Sasol Limited Financial Results for the six months ended 31 December 2017
SASOL LIMITED FINANCIAL RESULTS for the six months ended 31 December 2017
Slide 2: Forward-looking statements
Introduction Forward-looking Sasol may, in this document, make certain statements that are not historical facts that relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future p
Slide 3: Introduction
INTRODUCTION Bongani Nqwababa and Stephen Cornell
Slide 4: Key messages: what you will hear today
Key messages What you will hear today Largely strong set of results in a volatile but growing global economy Steady progress on LCCP with a drive towards commissioning, operations and business readiness Change in dividend policy to a more consistent Core HEPS base Strong balance sheet enhanced by pr
Slide 5: Largely strong earnings performance
Key messages Largely strong earnings • Group RCR at 0,30, regrettably two fatalities performance • Sales volumes ▲3%1 for Performance Chemicals, ▼1%1 for Base Chemicals, driven by higher and liquid fuels ▼3% oil prices OPERATIONAL • Synfuels Operations production volumes ▼1% PERFORMANCE • Eurasian O
Slide 6: Steady progress on LCCP
Key messages Steady progress • Cost and schedule on track on LCCP • Overall project 81% complete with construction execution at ~54% • $8,8bn spent of $11,13bn project cost • On track for start-up of first units in H2CY18 • US tax reforms contributing ~0,5% to returns • Project returns ~7,5 - 8,5% (
Slide 7: Strong balance sheet enhances shareholder value
Key messages Strong 2018 2022 balance sheet enhances shareholder value • Protect and strengthen the balance sheet and maintain investment grade credit ratings • Target a superior dividend payout ratio of 40% on Core HEPS • Incremental investment in existing assets Strategy • Balance growth and value
Slide 8: Continued sustainability and heightened investment focus in South Africa
Key messages Continued • Sasol Limited B-BBEE scorecard improved from Level 8 to Level 6 and on track for at least Level 4 by 2020 sustainability and • R4,9bn preferential procurement from black-owned enterprises for HY18 heightened • Shareholders approved our Sasol Khanyisa B-BBEE transaction inves
Slide 9: Continued sustainability and investment focus in Mozambique
Key messages Continued STRONG CONTINUED GOING sustainability and HISTORICAL PROGRESS BENEFITS TO STAKEHOLDERS FORWARD heightened investment focus in Mozambique • Sasol and its partners invested • >300 permanent jobs sustained • Support in-country industrialisation and >US$3bn with >US$1,1bn across o
Slide 10: Value-based growth strategy supports our compelling investment case
VALUE-BASED GROWTH STRATEGY SUPPORTS OUR COMPELLING INVESTMENT CASE To be a leading integrated global chemical and energy company, proudly rooted in our South African heritage, delivering superior value to our stakeholders To create superior value for our customers, shareholders and other stakeholde
Slide 11: Financial and operational performance
FINANCIAL AND OPERATIONAL PERFORMANCE Paul Victor
Slide 12: What you will hear today
Financial and operational performance What you will hear today Largely strong set of results with continued focus on cash, cost and capital management Protect and strengthen the balance sheet through continued hedging beyond peak gearing, a robust funding plan and deleveraging to improve flexibility
Slide 13: Macroeconomic environment
Macroeconomic environment Stronger crude oil prices drives higher chemical prices Currency volatility remains as rand strengthens Volatility in a US$1 = ZAR $/mmbtu (gas price) US$/bbl growing global economy R13,99 R13,40 $71 $60 R13,74 $57 $48 R12,37 $2,93 $2,95 HY17 HY18 HY17 HY18 Brent Product pr
Slide 14: Group profitability
Group profitability Core operating profit (%) Strong core HY17 HY18 %∆ by product Mining¹ 1 534 2 864 87▲ operating profit 14 performance Exploration and Production International (EPI)² 204 (2 649) >100▼ Performance Chemicals (PC)³ 4 020 3 878 4▼ 42 Base Chemicals (BC)³ 2 360 2 552 8▲ Energy⁴ 5 529
Slide 15: Operating profit impacted by changing macro environment
Operating profit TAILWINDS Operating profit impacted by • Higher crude oil and product prices HY17 13 672 • Higher refining margins and resilient changing macro US$ margins in chemical businesses environment and Exchange rate¹ (11%) Macro • Hedging strategy protects and once-off items environ- stren
Slide 16: Cash fixed costs
Cash fixed costs Impacted by TAILWINDS growth-related • Realised R3,5bn sustainable annual cash HY17 22 628 cost savings under Response Plan costs and • Sustainable annual BPEP savings of production US growth (LCCP & Gemini) (0,7%) 151 R5,4bn Growth interruptions costs Study, • Prudent headcount man
Slide 17: Mining and EPI OBUs
Mining and EPI OBUs 284 18,9 264 MINING Taking action to 16,6 R/ton mm tons • mm tons Operating profit up 87% to R2,9bn due address safety to strike in prior period and operational 4,4 • Management interventions in place to challenges 2,6 address safety performance • Commitment to deliver full suppl
Slide 18: Performance and Base Chemicals SBUs
Performance and Base Chemicals SBUs 4 730 1 625 PERFORMANCE CHEMICALS Resilient volumes 1 576 12 12 4 048 Rm kt • % with margins Sales volumes up 3%1, Eurasian operations production volumes up 2% impacted by • Robust US$ margin and volume strong Rand performance • Excluding the impact of Hurricane H
Slide 19: Energy SBU
Energy SBU 15,9 ENERGY Higher margins 15,8 29,6 28,6 392 394 mmbbl mmbbl number with focus on • Liquid fuels sales volumes 3% lower • Natref volumes down 21%, taking improving measurable actions to improve volumes operational performance • Softer SA market demand • Synfuels Operations – updated guid
Slide 20: Capital expenditure
Capital expenditure • Key focus on execution of strategic Optimised spend projects in North America and Southern on LCCP with Africa project on track 80 • Gemini HDPE and 17th oxygen train Rand billion successfully reached beneficial operation during period 60 • Capital forecast impacted by optimise
Slide 21: Strong balance sheet underpins superior returns
Near-term focus Strong balance BUSINESS ENHANCES sheet underpins IMPROVEMENT STRENGTHENS SHAREHOLDER FINANCIAL superior returns INITIATIVES POSITION VALUE • Effective current hedging programme • Improved cash flow stability • Enables Inzalo debt refinancing with Financial risk • Continued hedging be
Slide 22: Outlook
Outlook Business improvement • Focus on safety and stability of operations MINING initiatives • Coal purchases at higher cost to supplement own production support a • PPA gas production 114 – 118 bscf positive FY18 EPI • PSA drilling activities to continue outlook • No drilling activity in Canada •
Slide 23: On a robust foundation
ON A ROBUST FOUNDATION