On 24 February, Sasol released its 1H25 results, which were characterised by the following:

1. Turnover decreased by 10%, driven mainly by a 13% decrease in the average rand per barrel Brent crude oil price and a 5% decrease in sales volumes.
2. Sales volumes were lower mainly due to ongoing coal quality challenges, 1Q25 startup delays at Natref and a fire experienced in March 2024 at the East Cracker in the US which resulted in an outage until November 2024.
3. Expenses were well managed with the cash fixed cost decreasing by 1% to R35.2 billion.
4. Earnings per share (EPS) decreased by 52% to R7.22 due to the above while other items such as impairments and unrealised gains/losses on derivatives further negatively impacted earnings per share.
5. The new dividend policy allows dividends to be paid on 30% of free cash flows provided that net debt (excluding leases) is below $4 billion. Net debt (excluding leases) was $4.3 billion at the end of the period while free cash flows were in a deficit due to first order capital of R14.8 billion being more than the cash available from operating activities of R14.1 billion. This resulted in no interim dividend being paid.
6. Management lowered their guidance on most of its volume metrics for the year (table 2). Main reasons are the coal quality challenges, and the East Cracker outage mentioned above combined with a fire that occurred at Natref after the reporting period during January 2025.
7. Sasol will be having a capital markets day during May 2025 where more details are expected on its future strategies and further information on any potential IPOs or partnerships.

With no changes in our outlook and thesis we maintain our intrinsic value at R192 and therefore also our recommendation at a buy.