Sasol First-Half Profit Drops After Strike, Currency Losses

JOHANNESBURG (Capital Markets in Africa) – Sasol Limited said first-half profit declined as much as 44 percent from a year earlier after the world’s biggest producer of liquid fuels from coal was hurt by currency losses and a three-month strike at its South African operations.

Profit before one-time items, known as headline earnings, for the six months through December decreased by between 8.26 rand ($0.62) and 10.68 rand from the 24.28 rand reported a year earlier, the Johannesburg-based company said in a statement on Thursday. Earnings per share in the six months to Dec. 31 probably increased by 12 percent to 22 percent. Sasol will report financial results for the period on Feb. 27.

Sasol benefits when the rand is weaker because most of its products are sold at dollar-denominated prices, while it meets most costs in the South African currency. The company recorded translation losses of about 1.3 billion rand due to the strengthening of the rand against the dollar, while labor action at coal-mining operations that supply its Secunda plant resulted in a cost of about 1 billion rand, Sasol said.

Sasol fell as much as 3.7 percent on Thursday in Johannesburg, the biggest drop in eight weeks. The shares pared losses to trade 3.4 percent down at 407.67 rand a share at 10:47 a.m.

The Association of Mineworkers and Construction Union downed tools for about three months last year over disputes about wages and benefits, Alex Anderson, a spokesman for Sasol, said by phone.

“The impact of labor actions at our Secunda mining operations, during the six month period, resulted in a 16 percent decrease in mining production volumes and significantly higher once-off costs to ensure a continuous supply of coal to our Secunda Synfuels Operations,” the company said.

The Secunda plant, located 130 kilometers (82 miles) west of Johannesburg, converts coal from five mines into synthetic fuels and chemicals.