Sasol reduces cash costs

SASOL reduced cash costs despite severe drops in prices and profits over the past year.

SASOL reduced cash costs despite severe drops in prices and profits over the past year.

For the six months to December 2009 the chemicals and petrochemicals giant suffered a 51percent reduction in operating profit to R10,5billion and 52percent drop in headline earnings per share to R10,67.

The biggest unit, Sasol Synfuels, saw a 70percent drop in operating profit. The international synfuels business experienced a 90percent drop in profits. This, according to chief executive Pat Davies, was the result of lower fuel and chemical prices due to falling demand.

"We saw a massive drop (about 60percent) in fuel prices," Davies said. "Chemicals fell by around 30percent, but we are now seeing demand recovery."

In July, the plummeting decline in fuel caused the oil price to fall from $70 (about R516) a barrel to less than $60 R444) in just two weeks.

The petrol price in 2009 reached a two-year low of R6 per litre, down from all time highs of over R10,50 per litre in 2008.

Frost & Sullivan chemicals programme manager Mani James said that while the economic recession had a negative impact on Sasol, improving global demand for downstream chemicals was expected to be favourable.

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