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Massive impairments knock Sasol into R44bn loss, dividend policy revised 

Massive impairments knock Sasol into R44bn loss, dividend policy revised 
Ed Stoddard
By Ed Stoddard
20 Aug 2024
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Petrochemicals giant Sasol fell into a loss of over R44bn for its financial year to the end of June as asset impairments mounted against the backdrop of a subdued market for its products. 

Sasol said on Tuesday that a wave of impairments had effectively wiped out its profits for the financial year until the end of June, knocking it into a loss of over R42.2-billion compared to 2023 earnings of R9.3-billion.

Its share price tumbled over 6%, a clear sign of investor disappointment. 

The company incurred a gross loss from impairments totalling an eye-popping R75-billion. 

The big hit was on the Chemicals America Ethane value chain, with the impairments on that front adding up to almost R59-billion. 

“The impairments are primarily driven by external conditions, including prolonged softer market pricing and outlook,” Sasol said.

Prices for chemical products have been waylaid by a range of factors including geopolitical tensions and falling demand as customers have slashed stocks in the face of inflationary pressures. Global chemical producers across the board have been reeling. 

Read more: Brenntag cuts outlook as chemical prices remain under pressure | Reuters 


“The impairments reflect the weak outlook for the internal chemicals business,” Sasol’s outgoing CFO Hanré Rossouw told Daily Maverick. 

In South Africa, the Secunda liquid fuels refinery had impairments of R7.8-billion gross. 

Interestingly, 91% of Sasol’s Ebitda – earnings before interest, taxes, depreciation, and amortisation – came from the group’s South African operations. 

It is the chemicals business in the US – which has been plagued for years by a variety of problems – which is proving to be a drain of profits in a clear case of the grass not always being greener on the other side for a South African company. 

Faced with such brutal meltdowns, Sasol said it was revising its dividend policy and would not be declaring a final one for the year as its net debt of $4.1-billion – R73-billion – exceeded the new debt trigger. 

“The company’s dividend policy was based on 2.5x to 2.8x core headline earnings per share. The disconnect between headline earnings and cashflow generation, as well as elevated leverage levels, has necessitated a revision to the company’s dividend policy,” Sasol said. 

“The revised policy is based on 30% of free cash flow generated, provided that net debt (excluding leases) is below $4-billion on a sustained basis.” 

The upshot is that the full-year dividend is R2 per share compared to R17 last year – a fall of 88%. 

“We do want to be below $4-billion debt to start paying a dividend again,” Rossouw said, adding that this was a key aim for next year. 

This in turn will partly depend on a rebound in chemical prices, which remain depressed. DM

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