Sasol Limited · JSE:SOL
Sasol — FY2004 Earnings Presentation
39 slides from Sasol's earnings presentation, 2004
Slide 1: 2004 results presentation
1 2004 results presentation 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: 2004 milestones
2004 milestones 3 natural gas • Mozambique natural gas venture completed • Sasolburg plant converted to natural gas feedstock liquid fuels business (LFB) • LFB formed with merger of Exel Petroleum • Main Supply Agreement terminated and new arrangements established • Sasol-branded retail network bein
Slide 4: 2004 milestones (continued)
2004 milestones (continued) 4 synfuels • oxygen production capacity expanded • Project Turbo commenced chemicals • Sasol Dia acrylates complex brought on stream • Arya Sasol polymers project progressing in Iran gas-to-liquids (GTL)/ coal-to-liquids (CTL) • ORYX GTL plant approaches 40% completion •
Slide 5: 2004 key features
2004 key features 5 • strong Rand causes adverse currency effects (R6.0 billion) • operating profit and attributable earnings down by 22% and 24% respectively • excluding currency effects, operating profit up by 28% • benefit of high oil prices • margin pressures in most chemical businesses • final
Slide 6: Management initiatives – costs
management initiatives – costs 6 annual cost base reduced by R890 million • mining – cash cost per production ton same as 2003 • synfuels - cash cost per production ton reduced by 2% • polymers - fixed cash costs per production ton reduced by 6% • olefins & surfactants - fixed cash costs reduced by
Slide 7: Management initiatives – productivity / output
management initiatives – productivity / output 7 • mining - in-section machine productivity up 4% • synfuels - 2004 production tonnage up 5%, CAGR of 2.5% since 1999 • polymers - 2004 per-capita production up 10% (up 206% over last 10 years) • solvents - 2004 production tonnage up 20%
Slide 8: Management initiatives – focus
management initiatives – focus 8 underperforming or non-core chemical businesses closed or disposed of - • olefins & surfactants – disposal of Sasol Servo and impairment of poly internal olefins (PIO) and sulphonation plants • wax – disposal of interest in Energy Storage Technologies (USA) and impai
Slide 9: Market trends
market trends 9 full year change 1st half 2nd half 2004 vs. 2003 rand / US$ average rate 7.08 6.68 6.88 24% rand / US$ closing rate 6.21 17% rand / euro average rate 8.18 8.20 8.19 13% dated Brent (US$/bbl) 28.73 33.99 31.36 13% white product prices (US$/bbl) 37.48 45.13 41.31 18% ethylene (US$/mt)
Slide 10: Financial results
financial results SAaSOL > % reaching new frontiers
Slide 11: 2004 key income statement items
2004 key income statement items 11 change change R bn vs. 2003 US$ bn vs. 2003 turnover 60.2 7% 8.7 22% ebitda 14.3 13% 2.1 15% operating profit 9.3 22% 1.4 3% attributable earnings 5.9 24% 0.9 - earnings per share (cents) 974 24% 142 - dividend per share (cents) 450 - 71 22%
Slide 12: Weathering the rand storm
weathering the rand storm 12 operating profit average exchange rate in Rand billion US$1 = Rand 9.03 6.88 (24%) 4.8 7.2 7.0 7.8 4.7 3.9 2.4 5.3 4.0 5.8 1h00 2h00 1h01 2h01 1h02 2h02 1h03 2h03 1h04 2h04
Slide 13: 2004 turnover
2004 turnover 13 business unit consolidated change division R bn R bn vs. 2003 mining 5.2 1.1 + 7% synfuels 16.0 1.3 + 10% liquid fuels business 18.8 18.6 - 5% gas 1.5 1.4 - 6% polymers 6.7 6.6 + 5% olefins & surfactants 17.4 17.1 - 12% solvents 6.5 6.0 - other 11.7 8.1 - 16% total 83.8 60.2 - 7%
Slide 14: 2004 operating profit
2004 operating profit * 14 change vs. division R bn 2003 mining 1.2 - 8% synfuels 5.5 - 26% liquid fuels business 1.4 + 2% gas 0.4 - 14% polymers 1.0 + 9% olefins & surfactants (0.1) - solvents 0.1 - synfuels international (0.1) + 23% other (0.1) - total 9.3 - 23% * before effect of capital items
Slide 15: Change in operating profit
change in operating profit 15 operating profit elements in Rand - million June 2003 11 911 currency effect - 5 980 - 50% cost inflation etc - 657 - 6% crude oil prices + 2 250 + 19% other product prices + 630 + 5% management initiatives + 1 160 + 10% June 2004 9 314 - 22%
Slide 16: Quarterly operating profit differential 2004 vs. 2003
quarterly operating profit differential 16 2004 vs. 2003 differential in Rand million 476 198 (1 548) (1 723) Q1 Q2 Q3 Q4
Slide 17: Dividend maintained
dividend maintained 17 earnings per share dividend per share dividend cover 1 603 2.9 1 283 1 136 2.2 974 620 450 450 450 409 320 220 151 1999 2000 2001 2002 2003 2004
Slide 18: Key balance sheet and cash flow items
key balance sheet and cash flow items 18 2004 2003 2004 2003 R bn R bn US$ m US$ m cash retained from operating 7.3 6.5 1.1 0.7 activities additions to property, plant & 10.9 10.3 1.6 1.1 equipment gearing 41% 33%
Slide 19: Financial results - by business unit
19 financial results - by business unit
Slide 20: Mining
mining 20 operating profit * in rand million • lower operating profit due primarily to the 8% decrease currency effect on exports • in-section machine productivity up 4% 1 277 • per-capita productivity 6% higher 1 177 • production cash cost per ton same as 2003 • lead empowerment partner chosen 2003
Slide 21: Synfuels
synfuels 21 operating profit * in rand million • lower operating profit mainly due to 26 % decrease impact of strong rand • production output 5% higher 7 418 • cash unit production costs down 2% 5 515 • natural gas introduced as supplementary feed • cleaner-fuels project in progress 2003 2004 * befo
Slide 22: Liquid fuels business
liquid fuels business 22 operating profit * in rand million • increase primarily due to higher sales 2% increase volumes • new wholesale agreements in place 1 402 1 429 • successful merger with Exel • fast-track rollout of Sasol’s retail network • empowerment deal imminent • Natref Clean Fuels proje
Slide 23: Gas business
gas business 23 operating profit * in rand million • decrease primarily due to lower selling 14% decrease prices and once-off customer conversion costs • before once-off items in both years, operating profit was 4% higher 451 387 • empowerment venture performing well • co-generation and other new-ma
Slide 24: Polymers business
polymers business 24 operating profit * in rand million • operating profit increase essentially due 9% increase to higher sales volumes and prices • per-capita productivity up by 10% • offshore investments yield pleasing 971 890 returns • chemicals business rationalised • Project Turbo and Iran inve
Slide 25: Olefins and surfactants
olefins and surfactants 25 operating profit * in rand million • competitive markets and increased R113 m decrease feedstock costs pressure sales and margins • alkylates and monomers under pressure 67 • satisfactory performance by alcohols, surfactants and inorganic specialities • aggressive cost red
Slide 26: Solvents
solvents 26 operating profit * in rand million • lower operating profit despite record 69% decrease sales volumes – business severely impacted by strong rand 436 • strong performance by ketones and alcohols • strong demand for new acrylates production 135 2003 2004 * before effect of capital items
Slide 27: Sasol synfuels international (SSI)
sasol synfuels international (SSI) 27 • Oryx GTL (Qatar) passes 40% development stage • started feasibility study for expansion to 100 000 bbl/day • evaluating integrated upstream/downstream GTL venture • Nigerian GTL EPC bid process is progressing • potential for developing GTL plants in other gas-
Slide 28: Other businesses
other businesses 28 nitro • lower operating profit due to impairments and provisions, lower fertilizer and phosphoric acid sales and the strong rand • explosives business returns to profitability wax • higher operating profit – consolidation strategy targeting higher margins • exiting from underperf
Slide 29: Profit outlook
profit outlook 29 … a material increase in earnings is probable High international oil prices are expected to prevail. Forecasting currency movements is more difficult and risky although for planning purposes a relatively strong rand is assumed. Most international chemical prices and margins appear
Slide 30: A view of the year ahead
a view of the year ahead 30 • a material increase in earnings • gearing will peak, but will be within the target range • capex (cash flow) will amount to about R15 billion • Project Turbo (450 000 tpa polymers) • Arya Sasol Polymers (300 000 tpa polymers) • Oryx GTL (34 000 bbl/day fuel and naphtha)
Slide 31: A view of the year ahead (cont.)
a view of the year ahead (cont.) 31 • opportunities to streamline our portfolio will continue to be evaluated • dividend cover will move back to within range of 2.5 to 3.5 • focus on sustainability will intensify (BEE, environmental responsibility, employment equity, social governance)
Slide 32: Strategy update
strategy update SAaSOL > % reaching new frontiers
Slide 33: Primary growth drivers
primary growth drivers 33 • grow a global gas-to-liquids (GTL) business • grow the chemicals portfolio • exploit upstream hydrocarbon opportunities
Slide 34: Growth strategy objectives
growth strategy objectives 34 growth : US dollar earnings growth of 10% on a 3 year moving average basis (base years 1998 - 2000) return / eva : to exceed required rates of return as determined by our weighted average cost of capital (WACC). For new investments we target returns of 1.3 times WACC
Slide 35: Consistent growth through commodity cycle
consistent growth through commodity cycle 35 $m 2000 2001 2002 2003 2004 1000 growth 750 US dollar earnings growth of 500 10% on a moving average basis 250 (base years 1998 - 2000) 0 earnings target % 30 EVA 1.3 times WACC 20 WACC 1.3 times WACC 10 0 2000 2001 2002 2003 2004
Slide 36: 5-year annual compound growth (1999 – 2004)
5-year annual compound growth (1999 – 2004) 36 turnover 30% operating profit attrib. earnings 26% 20% 23% 20% 19% 17% 16% 10% Rand US$ Rand US$ Rand US$
Slide 37: Poised for new growth era
poised for new growth era 37 key projects to grow earnings include • natural gas venture (2004) – a new growth platform • acrylic acid and acrylates plant (2004) • Oryx GTL plant in Qatar (1st Q 2006) • ethylene and polyethylene plants in Iran (2005/06) • polypropylene and polythene plants in SA – P
Slide 38: New York listing: weekly trades
New York listing 38 1600 18 weekly trades (thousands) ADR weekly closing price (US$) 1400 16 1200 1000 14 800 NASDAQ NYSE 600 12 400 10 200 0 8 July 01, 2002 August 27, 2004
Slide 39: Contact persons
39 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 office - C