Sasol’s business update on April 17th demonstrates strong cash flow management despite global economic headwinds, with its destoning project at Secunda Operations progressing on schedule and within budget to enhance coal quality and operational efficiency. The renewal of atmospheric emissions licenses for key facilities underscores Sasol (JO:SOLJ)’s environmental compliance commitment, while South Africa’s extension of the 60% carbon tax allowance until 2030 provides crucial regulatory stability for long-term energy transition planning.
The company’s International Chemicals division has achieved EBITDA growth despite volume challenges, reflecting operational resilience in difficult market conditions. Sasol maintains robust liquidity reserves and implements rigorous cost management strategies, complemented by comprehensive hedging programs for FY25 and FY26 that shield operations from oil price volatility.
Strategic portfolio optimisation continues with the planned divestment from the US Phenolics business to strengthen margins and competitive positioning.
However, persistent operational challenges impact Sasol’s performance metrics. Margin compression continues due to macroeconomic uncertainties and geopolitical tensions. Coal quality issues at Secunda Operations necessitate reduced internal production and increased reliance on higher-cost external coal sources. Recent operational disruptions, including a Natref facility fire and unplanned Secunda outages, have significantly impacted production capacity. Sales volumes show concerning trends across all segments, with Fuels declining 1-3%, Chemicals Africa down 2-4%, and International Chemicals falling to the lower end of projected 4-8% decreases. Global trade tensions and US tariff policy changes create additional supply chain uncertainties. The downward revision of mining production targets to 28-30 million tonnes reflects persistent coal sourcing and quality challenges that threaten operational stability.
Broker Ratings and Long-Term Price Target (NYSE:TGT)
According to a Reuters poll, the long-term analyst rating consensus on Sasol remains a buy with a price target mean of 20044c.
