JOHANNESBURG (Reuters) – Petrochemicals group Sasol’s first-half profits rose 17 percent on the back of higher crude oil prices and increased demand for its speciality chemical products, the firm said on Monday.
Headline earnings per share (HEPS) for the six months ended Dec. 31, 2017 rose to 17.67 rand ($1.53) from 15.12 rand in the same period the previous year, in line with what the company flagged to the market.
HEPS is the main profit gauge in South Africa which strips out certain one-off items.
“The recent recovery in global oil and product prices positively impacted our results, however this was offset by operational challenges at our Natref and mining operations, currency effects and poor economic conditions in South Africa,” said joint president and chief executive officer, Bongani Nqwababa.
Strikes, plant shutdowns and an unexpected Eskom electricity supply interruption led to operational challenges at its Natref refinery and mining operations, the company said.
Sasol said it would settle debt from its black economic empowerment scheme, called Inzalo, of around 4.6 billion rand ($399 million) in June through existing cash and credit facilities.
This will allow the firm to repurchase up to 9.5 million preferred ordinary shares and fund any residual shortfall, which it estimates to be around 1.1 billion rand.
Sasol said in September it would fund a buy-out of indebted black investors after its share price slumped since the scheme’s launch, leaving investors unable to fully repay debts when the scheme unwinds.
The Sasol board said it had changed its dividend policy to pay dividends with a cover range based on core HEPS, which the firm believes reflects the sustainable business operations and is a measure of its business and financial performance.
Sasol declared a gross interim dividend of 5.00 rand ($0.43) per share, up from 4.80 rand the previous year.
($1 = 11.5202 rand)
Reporting by Tanisha Heiberg; Editing by Biju Dwarakanath