Sasol Limited · JSE:SOL
Sasol — FY2005 Earnings Presentation
47 slides from Sasol's earnings presentation, 2005
Slide 1: 2005 results presentation
2005 results presentation JSE: SOL NYSE: SSL 1
Slide 2: Forward-looking statements
forward-looking statements 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 shar
Slide 3: Key features of 2005
key features of 2005 Safety performance unacceptable Sasol Gas customers converted to natural gas supply Uhambo proposal recommended to Competition Tribunal 2nd 48 000 tpa 1-octene plant started up at Secunda EPC contract awarded for GTL plant in Nigeria MOU signed for lubricating base-oils plant in
Slide 4: Soaring to record heights: 2005 headline earnings
soaring to record heights 2005 headline earnings = 1 749 cps up 87% 1749 1597 1258 1280 934 666 420 402 348 324 2003 2004 2005 2001 2000 1999 2002 1996 1997 1998 21.5% p.a. compound growth over the past 5 years 4
Slide 5: 2005 market trends – higher product prices overshadow strong rand
2005 market trends – higher product prices overshadow strong rand and higher input costs change vs. 2005 2004 rand / US$ average rate 6.21 10% rand / US$ closing rate 6.67 7% rand / euro average rate 7.89 4% dated Brent (US$/bbl) 46.17 48% white product prices (R/bbl) 2 224 22% polymer basket (US$/m
Slide 6: Key financial highlights of 2005
key financial highlights of 2005 headline earnings per share up by 87% operating profit and attributable earnings up by 56% and 61% respectively higher fuel and chemical selling prices more than offset adverse currency impact margin pressures ease in most chemical businesses and restructuring benefi
Slide 7: 2005 capital expenditure on major capital projects
2005 capital expenditure on major capital projects project division Rm synfuels & Project Turbo clean-fuels & polymers project 5 841 polymers synfuels Oryx and Escravos GTL projects 1 495 international Ethane cracker, HDPE and LDPE plants in Iran polymers 945 olefins & 2nd octene train 288 surfactan
Slide 8: Investment strategy targets growth areas
investment strategy targets growth areas 2005 capital spend 2006 - 2010 capital budget R13.2 bn GTL chemicals chemicals 26% GTL, CTL & E&P energy turbo 47% energy 27% 75% of budgeted capex for 2006 – 2010 to be spent on energy related projects R14 bn expected capex for 2006 8
Slide 9: Product prices drive operating profit increase
product prices drive operating profit increase operating profit elements in Rand - million 1 350 1 250 970 1 620 2 480 1 808 5 070 14 506 9 314 2004 chemical crude oil & other selling IFRS impairments exch. rate volumes & 2005 prices refining prices inflation margins 9
Slide 10: Consistently strong financial performance
consistently strong financial performance 27.4% 23.5% 24.4% 1996 - 2005 2001 - 2005 2005 return on shareholders’ equity 31.8% 28.2% 29.6% 1996 - 2005 2001 - 2005 2005 return on capital employed* * excludes capitalized costs related to major projects in progress 10
Slide 11: 2005 financial results
2005 financial results 11
Slide 12: 2005 abridged income statement
2005 abridged income statement % change US$ m Rm % change +27% 11 150 turnover 69 239 +15% + 40% 4 343 gross profit 26 972 +26% + 26% (2 022) other operating expenditure (12 557) +14% - 15 translation gains 91 - + 73% 2 336 operating profit 14 506 + 56% + 76% 30 income from associates 184 + 57% + 97
Slide 13: Headline earnings adjustment
headline earnings adjustment 2005 2004 change eps Rm Rm Rm cents attributable earnings 9 573 5 940 3 633 + 592 adjustments 1 162 (242) 1 404 + 229 capital items written-off impairments 1 078 342 736 + 120 net profit on disposals (60) (233) 173 + 28 profit on sale of participation rights (33) - (33)
Slide 14: 2005 divisional operating profit
2005 divisional operating profit before capital items & operating profit before capital items accounting changes change vs. change vs. change vs. Rm 2004 Rm 2004 Rm 2004 mining 1 247 + 4% 1 224 + 4% 1 195 + 2% synfuels 7 560 + 37% 7 670 + 39% 7 014 + 27% liquid fuels business 1 900 + 33% 1 963 + 37%
Slide 15: Capital items written-off
capital items written-off division Rm Rm impairments alkylates plant and goodwill o&s (662) n-butanol, ethanol and ketone plants solvents (302) other various (114) (1 078) scrapping of assets scrapping of capital work in progress synfuels (111) scrapping of capital work in progress o&s (87) other va
Slide 16: Impact of IFRS changes
impact of IFRS changes effect of changes for year ended 30/06/2005 Rm re-assessment of asset useful lives (IAS 16 revised) 1 547 amendment to amortization of goodwill (IFRS 3) (198) effect on operating profit 1 349 effect on attributable earnings 855 effect on attributable earnings per share + 14% 1
Slide 17: Divisional financial review: another year of great teamwork!
divisional financial review another year of great teamwork! 17
Slide 18: Sasol group
sasol group operating profit in rand million strong Rand and impairments adversely impacted results 56% increase higher operating profit due primarily to: higher international oil prices and refining margins 14 506 improved chemical margins cost reductions and productivity improvements 9 314 withdra
Slide 19: Mining
mining operating profit in rand million higher operating profit despite lower sales % increase volumes 4% 2% total production and sales volumes reduced by 9% due to introduction of natural gas 1 247 1 195 1 194 1 177 export sales benefit from higher global prices since 1998 unit production costs hav
Slide 20: Synfuels
synfuels operating profit in rand million increased operating profit mainly due to % increase impact of high crude oil prices, net of hedge 37% 27% production output 3% lower following non- scheduled shutdowns 7 560 7 014 cash unit production costs up 9% due to reduced volumes and expenditure to imp
Slide 21: Liquid fuels business
liquid fuels business operating profit in rand million increased operating profit due to higher refining % increase margins, cost discipline and retail expansion 33% 35% 345 Sasol- and Exel-branded service stations established to date 1 924 1 900 1 429 1 429 2005 2005 2004 2004 operating before capi
Slide 22: Gas
gas operating profit in rand million first full year of natural gas supply enables % increase significant growth in operating profit 141% 128% sales volumes increased by 71% 17-year agreement signed with Petronet for 932 882 beneficial use of KwaZulu-Natal pipeline good progress being made with co-g
Slide 23: Sasol synfuels international (SSI)
sasol synfuels international (ssi) operating loss in rand million operating loss due to cost of increased project- % decrease related activities in respect of the Qatari and 44% 68% Nigerian ventures and evaluation of new opportunities (138) (138) (199) (232) 2005 2005 2004 2004 operating before cap
Slide 24: Sasol petroleum international (SPI)
sasol petroleum international (spi) operating profit in rand million stable gas production achieved in Mozambique Rm increase 399 395 oil production from Etame (offshore Gabon) 281 277 increased by more than 50% (118) (118) 2005 2005 2004 2004 operating before capital profit items & IFRS changes 24
Slide 25: Chemicals rebound
chemicals rebound operating profit* Solvents Polymers O&S Other R2 198m R777m 1h02 2h02 1h03 2h03 1h04 2h04 1h05 2h05 * before capital items and accounting changes 25
Slide 26: Olefins and surfactants
olefins and surfactants operating profit in rand million margins stabilised in spite of substantially higher Rm change feedstock costs (154) 234 surfactant and surfactant intermediate markets remain strong 188 problems hamper supply of products from Secunda Safol plant (46) further substantial reduc
Slide 27: Polymers
polymers operating profit in rand million excellent financial and production performance % increase marred by tragic explosion 44% 37% operating profit up on strength of higher prices, efficiency and cost containment 1 484 1 326 Asian investments continue to generate good earnings 1 030 971 2005 200
Slide 28: Solvents
solvents operating profit in rand million record turnover and operating profit despite high % increase feedstock prices 962% 1 099% selling prices reached unsustainable highs main businesses performed above expectations 1 619 strong focus on cost management and 1 243 qualitative growth maintained 13
Slide 29: Nitro
nitro operating profit in rand million increased operating profit due to: Rm change higher ammonia prices 606 382 improved margin management stringent cost control 454 414 withdrawal from non-core or poor performing activities non-recurrence of 2004 provisions 32 fertilizer business returns to profi
Slide 30: Wax
wax operating profit in rand million operating profit lower mainly due to higher % decrease feedstock prices and feedstock-related 22% 20% production interruptions value-addition remains focus of wax portfolio 270 252 global demand for FT waxes increasing 211 202 2005 2005 2004 2004 operating before
Slide 31: Profits increase despite continued Rand strength
profits increase despite continued Rand strength operating profit avg. exchange rate in Rand billion US$1 = Rand 10.97 6.21 2.5 3.8 4.8 5.8 7.0 7.8 7.2 4.7 4.0 5.3 6.5 8.0 1h00 2h00 1h01 2h01 1h02 2h02 1h03 2h03 1h04 2h04 1h05 2h05 31
Slide 32: 2005 dividend increased by 20% to 540 cents
2005 dividend increased by 20% to 540 cents dividends per share in SA cents yield* over 5 years totals 37% % 145 + 540 450 450 450 2005 dividend approximates US$.84 per share final 320 dividend cover of 2.9 returns to within the 220 preferred range of 2.5 to 3.5 times interim 2000 2002 2005 2001 200
Slide 33: Key financial ratios
key financial ratios 2005 2004 operating margin (%) 21.0 15.5 dividend cover (times) 2.9 2.2 gearing (net debt to equity) (%) 37.6 41.2 net working capital as % of turnover 18.2 17.8 ebitda to net borrowing costs (times) 11.7 10.5 net debt to ebitda (times) 0.9 1.0 cash available from operating acti
Slide 34: Financing activities
financing activities €400m revolving credit facility refinanced at substantially improved terms and conditions debut €300m Eurobond successfully issued in European capital markets first SA credit ratings awarded to Sasol by Moody’s at Aa3.za long-term and Prime-1.za short-term Standard & Poor’s long
Slide 35: Satisfactory growth forecast for 2006
satisfactory growth forecast for 2006 international oil and commodity chemical markets and prices are unstable and so forecasting these with confidence is not possible. Nevertheless, assuming no major disruptions in world currency and energy markets, we anticipate satisfactory growth in earnings in
Slide 36: Strategy update
strategy update new management – consistent pursuit of strategy 36
Slide 37: Safeguarding a successful strategy: growth drivers
safeguarding a successful strategy growth drivers 1. grow a global gas-to-liquids (GTL) and coal-to-liquids (CTL) business 2. grow an integrated chemicals portfolio, and 3. exploit integrated upstream hydrocarbon opportunities 37
Slide 38: Growing a global GTL and CTL business
growing a global GTL and CTL business 1st growth driver revised roll-out for international GTL programme (incl. partners) 600 k bbl/day 450 300 150 0 2006 2014 targeted gross GTL capacity estimate of associated liquids 38
Slide 39: GTL programme gains momentum
GTL programme gains momentum 1st growth driver Oryx GTL (Qatar) passes 80% development stage started feasibility study for expansion to 100 000 bbl/day evaluating integrated upstream/downstream GTL venture GTL product marketing activities ramping up SasolChevron and QP signed MOU for GTL lubricating
Slide 40: Growing an integrated chemicals portfolio
growing an integrated chemicals portfolio 2nd growth driver chemical sales and ebitda ($ bn) US$ bn US$ bn 8 0.8 6 ebitda 0.6 4 0.4 2 0.2 sales 0 0 1998 2005 40
Slide 41: Chemicals scorecard
chemicals scorecard 2nd growth driver poly 2 plant at Sasolburg successfully uprated 2nd octene train in full production additional PVC capacity brought on stream at Sasolburg installed polymer production capacity set to almost double – new world- scale polymer plants under construction in South Afr
Slide 42: Exploit integrated upstream hydrocarbon opportunities
exploit integrated upstream hydrocarbon opportunities 3rd growth driver upstream portfolio set to gain critical mass proved developed and undeveloped reserves crude oil and condensate – *17.1 mmboe natural gas – *1.4 tcf (Sasol – 3.5 tcf) new gas exploration programme commenced in blocks 16 & 19 off
Slide 43: In longer term create GTL/CTL/chemicals hubs
in longer term create GTL/CTL/chemicals hubs fuel 70% markets coal / gas GTL natural gas processing process chemical chemical 30% feedstocks markets replicate SA business model 43
Slide 44: Safety remains our top priority
safety remains our top priority 3.0 tragic incidents and loss of life recordable cases per 200 000 hours DuPont safety recommendations 2.0 implemented safety charter signed with unions safety improvement plans launched in 1.0 all divisions RCR group target of 0.5 by end 2006 fiscal year 0 2001 2005
Slide 45: Empowerment
empowerment Black Economic Empowerment (BEE) is progressing on many fronts LFB – announcement on empowerment of Uhambo is imminent Mining – Eyesizwe announcement this year other empowerment strategies being considered EE at all levels receiving focused attention senior executive appointments being m
Slide 46: In conclusion: a great year
in conclusion a great year strategy in place to deliver long term growth in shareholder value transformation of Sasol is advancing 46
Slide 47: Contact persons
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: Johannesburg - Cavan Hill