Sasol Limited · JSE:SOL
Sasol — H1 2004 Earnings Presentation
51 slides from Sasol's earnings presentation, March 2004
Slide 1: International roadshow
1 international roadshow march 2004 JSE: SOL NYSE: SSL
Slide 2: Forward-looking statements
forward-looking statements 2 In this report we make certain statements that are not historical facts and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable, relating, among other things, to volume growth, increases in market sh
Slide 3: Key features
key features 3 • strong Rand causes adverse currency effects ($0.5 billion) • operating profit and attributable earnings down by 22% and 27% in dollar terms respectively • excluding currency effects, ZAR operating profit up by 2% • margin pressures in chemical businesses continue • interim dividend
Slide 4: Crude oil prices
crude oil prices 4 $/bbl 35 Dated Brent 25 15 $16.1 $12.6 $24.6 $28.3 $22.7 $27.8 $28.9 5 1998 1999 2000 2001 2002 2003 1h04
Slide 5: Chemical prices
chemical prices 5 [indexed to July 1997] ammonia polymers phenols solvents 200% 180% 160% 140% 120% 100% 80% 60% 40% J97 J98 J99 J00 J01 J02 J03
Slide 6: Rand strength continues
Rand strength continues 6 half-yearly average period end US$1 = Rand US$1 = Rand 8.57 6.69 7.28 7.91 9.29 10.97 10.03 8.04 7.08 1h01 2h01 1h02 2h02 1h03 2h03 1h04
Slide 7: Currency a dominant factor
currency a dominant factor 7 operating profit avg. exchange rate in Rand billion US$1 = Rand 10.97 7.08 7.0 7.8 7.3 4.7 4.0 1h02 2h02 1h03 2h03 1h04
Slide 8: Change in Rand operating profit – 6 months
change in Rand operating profit – 6 months 8 operating profit elements in Rand - million December 2002 7 250 currency effects – 3 440 - 47% other prices/inflation - 851 - 12% crude oil prices + 650 + 9% productivity + 370 + 5% December 2003 3 979
Slide 9: Income statement – salient features (Rand)
income statement – salient features (Rand) 9 turnover operating profit earnings per share in Rand - billion in Rand - billion in SA cents 10% decrease 45% decrease 49% decrease 33.0 7.3 797 29.9 4.0 408 1h03 1h04 1h03 1h04 1h03 1h04
Slide 10: Income statement – salient features (US$)
income statement – salient features (US$) 10 turnover operating profit earnings per share in US$ - billion in US$ - million in US cents 28% increase 22% decrease 27% decrease 4.2 723 79 3.3 562 58 1h03 1h04 1h03 1h04 1h03 1h04
Slide 11: Financial results - by business unit
11 financial results - by business unit
Slide 12: 1h04 turnover
1h04 turnover 12 business unit consolidated division US$-m US$-m % change mining 353 61 + 20% synfuels 1,066 92 + 67% oil and gas 1,465 1,427 + 34% chemicals 2,805 2,596 + 23% other * 108 42 + 282% total 5,797 4,218 + 28% * mainly SPI and Sastech
Slide 13: 1h04 operating profit
1h04 operating profit 13 % change US$-m division R-m % change + 4% 73 mining 521 - 26% - 32% 312 synfuels 2,207 - 52% + 20% 119 oil and gas 841 - 15% - 74 chemicals 525 - 61% 45% + 57% (16) other (115) + 69% - 22% 562 total 3,979` - 45% average exchange rates used: 1h04: US$1 = R7.08 1h03: US$1 = R1
Slide 14: Mining
mining 14 operating profit in rand million • lower operating profit due primarily to 26% decrease the currency effect on exports and higher costs 701 • operating profit for 2h04 expected to 521 be higher due to strong dollar export prices • negotiations advancing with a prospective BEE partner 1h03
Slide 15: Synfuels
synfuels 15 operating profit in rand million • lower operating profit mainly due to 52 % decrease impact of strong rand (R2.5 billion), partly offset by higher product prices 4 572 • operating profit for 2h04 expected to be higher 2 207 • Project Turbo (fuel enhancement) approved and in progress 1h0
Slide 16: Oil and gas
oil and gas 16 operating profit in rand million • decrease due to lower contribution by 15% decrease gas business and adverse currency effects 995 • lower operating profit forecast for 2h04 841 (mainly lower volumes and prices) • liquid fuels business (LFB) formed – new supply arrangements in place
Slide 17: 1h04 chemicals operating profit
1h04 chemicals operating profit 17 % change US$-m division R-m % change - 21% 34 polymers 244 - 43% - 68% 12 solvents 87 - 77% - 133% (5) olefins & surfactants (38) - 125% - 71% 7 nitro 52 - 78% + 14 wax 97 + 213% 367% - 12 other 83 - 33% - 45% 74 total 525 - 61% average exchange rates used: 1h04: U
Slide 18: Polymers
polymers 18 operating profit in rand million • lower operating profit essentially due 43% decrease to impact of strong rand • operating profit for 2h04 expected to 428 be substantially higher due to higher international selling prices 244 • Malaysian investments meeting expectations 1h03 1h04 US$ te
Slide 19: Solvents
solvents 19 operating profit in rand million • lower operating profit despite higher 77% decrease sales volumes and dollar selling prices – business severely impacted 382 by strong rand • operating profit for 2h04 expected to be substantially higher due to higher international selling prices 87 1h03
Slide 20: Olefins and surfactants
olefins and surfactants 20 operating profit in rand million • disappointing operating results due to 125% decrease continued margin squeeze especially in the alkylates and monomers 154 businesses • significant drive to reduce costs • marginal improvement in operating (38) profit forecast for 2h04 1h
Slide 21: Nitro
nitro 21 operating profit in rand million • lower operating profit due to low 78% decrease summer rainfalls and phosphates’ losses which impacted the fertilizer 237 business • pleasing turnaround in local explosives business • higher ammonia prices should lead to 52 improved results in 2h04 1h03 1h0
Slide 22: Wax
wax 22 operating profit in rand million • higher operating profit due to 213% increase improved local (SA) margins and acquisition of European wax emulsion 97 business • operating profit for 2h04 expected to be similar to first half 31 1h03 1h04 US$ terms: 367% increase
Slide 23: 2004 interim dividend
2004 interim dividend 23 dividends per share in SA cents dividend cover 3.7 1.9 • 2003 ZAR interim dividend maintained, confirming confidence in group’s future 215 ($0.30) 235 ($0.31) 215 ($0.25) growth prospects • fy04 US$ interim dividend approximates 30 US cents per share – an increase of 20% 1h0
Slide 24: Gearing constraints being adhered to
gearing constraints being adhered to 24 capex gearing interest cover in Rand - billion percentage times 15% decrease up 5% points 60% decrease 5.7 38 14 4.8 33 6 1h03 1h04 1h03 1h04 1h03 1h04 US$ terms: 20% increase
Slide 25: Management interventions - capex
management interventions - capex 25 capital spend balancing capex R12.2 bn (US$1.7 bn) capital spend forecast and gearing for fy04 - 10% higher than fy03 (in Rand terms) - R4.2 bn lower than budget - further 10% increase (in Rand terms) envisaged in fy05
Slide 26: fy04 group profit outlook
fy04 group profit outlook 26 • prevailing rand volatility makes forecasting difficult – continuing strong Rand forecast • high oil prices expected to continue • certain international chemical prices beginning to strengthen • major cost reduction initiatives have been implemented • fy04 ZAR results f
Slide 27: 5-year annual compound growth (1999 – 2004)
5-year annual compound growth (1999 – 2004) 27 turnover 30% operating profit attrib. earnings 20% 10% Rand US$ Rand US$ Rand US$
Slide 28: Strategy update
28 strategy update
Slide 29: Primary growth drivers
primary growth drivers 29 • optimize performance of existing businesses • grow chemicals’ portfolio • exploit upstream hydrocarbon opportunities • commercialize and expand gas-to-liquids technology
Slide 30: Optimize performance of existing businesses
30 optimize performance of existing businesses
Slide 31: Management interventions – Project Rand
management interventions – Project Rand 31 motive reduce impact of negative macro-variables objective sustainable reduction of cash costs expected saving +R1.0 billion (US$140 m) in fy04 (± 60% sustainable)
Slide 32: Chemical portfolio disposals / closures
chemical portfolio disposals / closures 32 olefins & surfactants Sasol Servo idling of Porto Torres LAB plant solvents Mining Chemicals (marketing) nitro (explosives) Roche Blasting; Southwest Energy; DHB; Mining Initiators waxes Ceraven and EST polymers Chlorine Derivatives
Slide 33: Sasol / Petronas joint venture
Sasol / Petronas joint venture 33
Slide 34: Sasol / Petronas joint venture
Sasol / Petronas joint venture 34 merger parties Sasol’s LFB – 37.5%; Engen – 37.5%; BEE partners – 25% jv includes Engen refinery; Sasol’s interest in Natref refinery; offtake of liquid fuel components from Synfuels; ± 1 500 service stations refining capacity 14 billion litres p.a. (petrol, kero &
Slide 35: Grow chemicals' portfolio
35 grow chemicals’ portfolio
Slide 36: Project Turbo (polymers)
Project Turbo (polymers) 36 amount approved R7.6 billion capacity 190 ktpa ethylene; 255 ktpa propylene; 300 ktpa polypropylene; 220 ktpa polyethylene (LDPE) progress ordering long-lead items; EPC contractors appointed; finalising basic engineering and starting detail design; civil construction star
Slide 37: Arya Sasol polymers project (Iran)
Arya Sasol polymers project (Iran) 37 amount approved US$140 million (Sasol’s equity share) partner National Petrochemical Co. of Iran capacity 1 000 ktpa ethane cracker: 50% interest 300 ktpa HDPE plant: 50% interest 300 ktpa LDPE plant: 50% interest progress cracker construction > 40% LDPE plant:
Slide 38: Arya Sasol polymers project (Iran)
Arya Sasol polymers project (Iran) 38 cracker furnaces under construction
Slide 39: Sasol Dia Acrylates
Sasol Dia Acrylates 39 amount approved R1 590 million (Sasol’s share) partner Mitsubishi Chemical Corporation (25%) capacity 80 ktpa crude acrylic acid; 10 ktpa glacial acrylic acid; 80 ktpa butyl acrylate; 35 ktpa ethyl acrylate completion February 2004
Slide 40: Sasol Dia Acrylates
Sasol Dia Acrylates 40 Sasolburg complex
Slide 41: Exploit upstream hydrocarbon opportunities
41 exploit upstream hydrocarbon opportunities
Slide 42: Mozambique natural gas project
Mozambique natural gas project 42 project value R11.2 billion partner ENH (Mozambique): 30% interest in field and central processing facility progress field commissioned: January 2004 gas in Secunda: February 2004 SCI conversion: May 2004 planned completion June 2004
Slide 43: Mozambique natural gas project
Mozambique natural gas project 43 central processing facility - Mozambique
Slide 44: Commercialize and expand gas-to-liquids technology
44 commercialize and expand gas-to-liquids technology
Slide 45: Oryx GTL project (Qatar)
Oryx GTL project (Qatar) 45 amount approved US$466 million (Sasol’s share) partner Qatar Petroleum (51%) progress 33 month execution contract: ⅓ complete project on schedule planned completion December 2005
Slide 46: Oryx GTL project (Qatar)
Oryx GTL project (Qatar) 46 civil construction work in progress
Slide 47: Escravos GTL project (Nigeria)
Escravos GTL project (Nigeria) 47 amount approved US$729 million (Sasol’s share – 50% risk- based financing) progress EPC contract award expected June 2004 planned completion 3Q2007
Slide 48: Escravos GTL project (Nigeria)
Escravos GTL project (Nigeria) 48 site preparation complete
Slide 49: Strategic projects on track; better second half expected
49 • strategic projects on track • better second half expected signaling new growth phase
Slide 50: Share performance
share performance 50 % ADR S&P 500 + 133% 250 230 210 190 170 150 130 110 - 11% 90 70 50 Jan 01 Feb 04 1h04 dividend up ± 30% versus 1h03 in US$ terms Feb ’04 average daily volume traded up + 180% since prior to listing on NYSE
Slide 51: Contact persons
51 The copyright in the material contained in this presentation vests in Sasol Limited, and any reproduction, publication, adaptation, broadcast or performance in public of any portion of the material requires the express prior authorisation of Sasol Limited. Contact persons: - Cavan Hill (+27 11 44