Sasol (SOL) H2 2025 earnings summary

Executive summary

• Achieved most FY2025 financial targets with free cash flow up 75% year-over-year, despite lower turnover, EBITDA, and oil prices, driven by disciplined cost and capital management.

• Net debt reduced to $3.7 billion, the lowest since 2016 and ahead of deleveraging targets, with a clear path to further deleveraging and dividend reinstatement once net debt is below $3 billion.

• Strategic focus on safety, operational reliability, emission reduction, renewables, and restoring the Southern Africa value chain.

• Safety performance improved, with the first fatality-free year for Sasol Mining and no major process safety incidents, though one fatality occurred elsewhere.

• Maintained cost discipline with cash fixed cost increases below inflation and capital expenditure reduced by 16%.

Financial highlights

• Adjusted EBITDA down 14% to R52 billion year-over-year, mainly due to lower production volumes and macroeconomic headwinds.

• Free cash flow increased to R12.6 billion, up 75% from prior year, supported by disciplined capital spend and the Transnet legal settlement.

• Turnover decreased 9% to R249.1 billion; gross margin declined by 12% to R112.1 billion, with margin percentage down to 45%.

• Headline earnings per share rose 93% to R35.13; earnings per share at R10.60 versus a loss in the prior year.

• Capital expenditure was R25 billion, 13% below target and 16% lower than prior year.

Outlook and guidance

• FY2026 breakeven target set at $55-$60 per barrel, with Secunda production guidance of 7.0-7.2 million tons.

• Adjusted EBITDA for International Chemicals expected at $450-$550 million with a margin of 10%-13%.

• CapEx guidance for FY2026 remains at R24-26 billion, with increases expected in FY2027 due to the Secunda phase shutdown.

• Working capital targeted at 15.5-16.5% of turnover.

• Continued focus on cost savings, targeting R10-15 billion by FY2028, with 10%-30% achieved to date.