Sasol Limited · JSE:SOL
Sasol — H1 2006 Earnings Presentation
50 slides from Sasol's earnings presentation, Mar 6, 2006
Slide 1: 1H06 results presentation
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Slide 2: Forward-looking statements
forward-looking statements We may in this document make 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. There are forward- looking statements as defined in the U.S. Private Secur
Slide 3: Key features of 1H06
key features of 1h06 • Safety Improvement Plan rollout • Oryx GTL project more than 95% complete • Uhambo decision disappoints –way forward being jointly considered with Petronas and BEE partners • Tshwarisano BEE announcement • Mining BEE announcement imminent • China coal-to-liquids pre-feasibilit
Slide 4: Key financial highlights of 1H06
key financial highlights of 1h06 • operating profit and attributable earnings up by 71% and 86% respectively • headline earnings per share up by 67% • benefit of higher oil prices • chemical margins under pressure • major capital projects advanced • gearing reduces to 29% • interim dividend increase
Slide 5: Sasa
Sasa a
Slide 6: 1H06 market trends – higher product prices dominated
1h06 market trends – higher product prices dominated change vs. 1h06 1h05 rand / US$ average rate 6.52 5% rand / US$ closing rate 6.33 12% rand / euro average rate 7.85 - dated Brent (US$/bbl) 59.21 38% white product prices (R/m³) 3 058 40% polymer basket (US$/mt) 1 001 5% benzene (US$/mt) 841 22% k
Slide 7: Operating profit momentum continued
1h00 2.5 2h00 3.8 1h01 4.8 2h01 5.8 1h02 7.0 2h02 7.7 1h03 7.2 2h03 4.6 1h04 3.9 operating profit (R-bn) 2h04 5.3 1h05 6.5 2h05 7.9 .. and the momentum continued 1h06 11.1 7
Slide 8: 1H06 abridged income statement
1h06 abridged income statement % change % change US$ m Rm vs. 1h05 vs. 1h05 + 13% 6 175 turnover 40 256 + 19% + 34% 2 650 gross profit 17 275 + 40% + 2% (884) other operating expenditure (5 762) + 7% - 14% (64) translation losses (418) - 9% + 63% 1 702 operating profit 11 095 + 71% - 8% 12 income fr
Slide 9: Headline earnings adjustment
headline earnings adjustment 1h06 1h05 change eps Rm Rm Rm cents attributable earnings 7 295 3 915 3 380 540 adjustments (133) 325 (458) (74) capital items written-off impairments 99 242 (143) (23) net profit on disposals (211) (42) (169) (27) reversal of impairment (140) - (140) (23) scrapping of a
Slide 10: Divisional financial review
divisional financial review 10
Slide 11: 1H06 divisional operating profit
1h06 divisional operating profit % change US$ m division Rm % change + 14% 98 mining 636 + 19% + 89% 1 125 synfuels 7 336 + 99% + 41% 173 liquid fuels business 1 125 + 47% + 58% 120 gas 780 + 66% - (39) synfuels international (256) - - 44 olefins & surfactants 290 - - 35% 60 polymers 394 - 31% - 11%
Slide 12: Sasol group operating profit
sasol group operating profit in rand million 71% increase 11 095 • increase in operating profit due primarily to higher international oil prices and refining margins 7 890 6 479 1h05 2h05 1h06 US$ terms: 63% increase 12
Slide 13: Mining operating profit
mining operating profit in rand million • higher operating profit due primarily to 19% increase increased sales volumes and prices • production cash cost per ton up <2% 706 636 • operating profit for 2h06 expected to be 533 lower due to decrease in export selling prices 1h05 2h05 1h06 US$ terms: 14%
Slide 14: Synfuels operating profit
synfuels operating profit in rand million • increased operating profit mainly due to 99% increase high crude oil prices 7 336 • production output 1% higher, mainly due to postponement of shutdown to 1h07 • cash unit production costs up 6% 3 860 3 686 • operating profit for 2h06 expected to be lower
Slide 15: Liquid fuels business operating profit
liquid fuels business operating profit in rand million • increased operating profit primarily due 47% increase to higher rand refining margins and retail sales 1 129 1 125 • operating profit for 2h06 expected to be lower due to reduced rand refining 763 margins 1h05 2h05 1h06 US$ terms: 41% increase
Slide 16: Gas operating profit
gas operating profit in rand million • increase in operating profit due to higher 66% increase sales volumes (21%) and prices. 780 • 25% stake in natural gas pipeline sold to iGas • lower operating profit forecast for 2h06 470 461 primarily due to the sale of portion of the pipeline in 1h06 1h05 2h0
Slide 17: Sasol synfuels international (SSI)
sasol synfuels international (ssi) operating loss in rand million 392% increase • higher operating loss due to increased project activity relating to GTL and CTL ventures • 2h06 operating results expected to be (52) similar to first half (149) (256) 1h05 2h05 1h06 US$ terms: 366% increase 17
Slide 18: Sasol petroleum international (SPI)
sasol petroleum international (spi) operating profit in rand million • increased operating profit due to 123% increase higher natural gas volumes and crude oil selling prices 265 • exploration activities continue in Mozambique (gas) and Nigeria (oil) 161 • 2h06 operating results expected to be 119 l
Slide 19: Olefins and surfactants operating profit
olefins and surfactants operating profit in rand million • before impairments and reversal of sunk costs, the 1h06 operating profit was R426m increase R169m versus R112m in 1h05 – up 51% 290 • record feedstock cost increases and the negative impact of hurricane Rita recovered through higher product
Slide 20: Polymers margins under pressure
polymers margins under pressure 60 45 basket of polymer prices expressed as a multiple of Brent crude oil prices times 30 15 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20
Slide 21: Polymers operating profit
polymers operating profit in rand million • operating profit decrease essentially due 31% decrease to tighter margins resulting from higher oil-derivative feedstock costs 906 • sales volumes up 4% • 2h06 operating profit expected to be 569 similar to first half 394 1h05 2h05 1h06 US$ terms: 35% decr
Slide 22: Solvent margins under pressure
solvent margins under pressure 60 45 basket of solvent prices expressed as a multiple of Brent crude oil prices times 30 15 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 22
Slide 23: Solvents operating profit
solvents operating profit in rand million • lower operating profit mainly due to 6% decrease normalization of selling prices and margins 687 • sales volumes up 6% 551 516 • 2h06 operating profit expected to be substantially lower due to increased margin pressure 1h05 2h05 1h06 US$ terms: 11% decreas
Slide 24: Wax operating profit
wax operating profit in rand million • operating profit lower due to higher 36% decrease oil-derivative feedstock cost increases • 2h06 operating results expected to be 87 82 similar to first half 67 1h05 2h05 1h06 Note: comparative figures exclude operating US$ terms: 23% decrease profit of Paramel
Slide 25: Nitro operating profit
nitro operating profit in rand million • increased operating profit due to 20% increase higher ammonia prices and pleasing 301 results from the explosives business • 2h06 operating results expected to be 251 materially lower than first half 198 because of normal fertilizer seasonality 1h05 2h05 1h06
Slide 26: 2006 interim dividend increased by 22% to 280 cents
2006 interim dividend increased by 22% to 280 cents dividends per share in SA cents dividend cover 2.8 4.2 • 2006 interim dividend increased by 22% 310 • 2006 interim dividend approximates 280 230 US$.44 per share – an increase of 19% • dividend cover for the full financial year expected to be withi
Slide 27: FY06 group profit outlook
fy05 group profit outlook assuming lower oil and commodity chemical prices and a stronger rand, relative to the first half, earnings in the second half are expected to be considerably lower than the first half although pleasing growth in earnings for the full financial year is anticipated 27
Slide 28: amo
amo 28
Slide 29: Primary growth drivers
primary 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 upstream hydrocarbon opportunities 29
Slide 30: 1st growth driver
1st growth driver 30
Slide 31: Oryx GTL project (Qatar)
Oryx GTL project (Qatar) installed total cost - $489 m (Sasol’s 49% share) beneficial operation – 2Q2006 31
Slide 32: Escravos GTL project (Nigeria)
Escravos GTL project (Nigeria) engineering activities well advanced – site handover to EPC contractor during 2Q2006 expected start of beneficial operations – 1h2009 32
Slide 33: Update of other GTL projects
update of other GTL projects • SasolChevron bid for Tinrhert GTL (Algeria) put on hold • pre-feasibility study for Escravos GTL expansion [66 000 bpd] in progress • technical feasibility work being undertaken in respect of two additional Qatari projects • base oil venture for Oryx1 in progress • pre
Slide 34: China coal-to-liquids (CTL) update
coal-to-liquids (CTL) update • China • pre-feasibility study completed November 2005 • discussing framework for developing feasibility study stage ll • preliminary evaluation of opportunities in USA and India • typical world-scale CTL plant • 80 000 bpd nominal capacity [66% diesel; 34% naphtha & LP
Slide 35: 2nd growth driver: grow an integrated chemicals portfolio
24 growth driver f! fl 4 f . grgw an integrated chemicals portfolio 35
Slide 36: Project Turbo (polymers) update
Project Turbo (polymers) update amount approved – R9.1 bn increased polymer capacity: 220 ktpa polyethylene 330 ktpa polypropylene beneficial operation (BO): polyethylene 3Q2006; polypropylene 4Q2006 36
Slide 37: Arya Sasol polymers project (Iran) - update
Arya Sasol polymers project (Iran) - update amount approved - €197 million (Sasol’s 50% equity share) progress: 1 000 ktpa ethane cracker - >92% complete (BO – 3Q2006) 300 ktpa HDPE plant - >87% complete (BO – 4Q2006) 300 ktpa LDPE plant - >65% complete (BO – 4Q2006) 37
Slide 38: 3rd octene train
3rd octene train capacity 100 000 tpa octene progress construction commenced planned completion 2Q2007 38
Slide 39: Olefins & surfactants divestiture
olefins & surfactants divestiture • currently >40 interested buyers (±50% are strategic buyers) • projected disposal time-frame during 2006 • March - Information Memorandum to be issued • April - data room operational • May/June - due diligence by prospective buyers • July - final binding offers in
Slide 40: 3rd growth driver: exploit upstream hydrocarbon opportunities
34 growth driver sesot af : i. xploltiupstream hydrocarbon : opportunities | "| =< 40
Slide 41: Increased upstream opportunities being exploited
increased upstream opportunities being exploited Mozambique (natural gas) • stable production and plant operations in Temane • exploration programme (onshore and offshore) being accelerated Nigeria (oil) • various opportunities awaiting government approval or in early stages of development Southern
Slide 42: Empowerment
empowerment • Black Economic Empowerment (BEE) is progressing on many fronts • Tshwarisano (downstream liquid fuels) • Mining – lead partner Eyesizwe • biodiesel • ChemCity • Gas • evaluating application of Draft Codes of Practice on Sasol 42
Slide 43: Strategic performance objectives
strategic performance objectives growth: to achieve 10% attributable earnings growth per annum in US$ terms on a three-year moving average basis (base years 1998 – 2000) return / eva: to achieve an economic value added rating of 1,3 times our weighted average cost of capital on all new major investm
Slide 44: US$ attributable earnings growth
US$ attributable earnings growth 1500 3-year moving average growth target $m 750 0 fy01 fy02 fy03 fy04 fy05 fy06 (e) 44
Slide 45: Return / EVA track record
return / eva track record 30 actual eva % group WACC % target WACC 15 0 fy01 fy02 fy03 fy04 fy05 fy06 (e) 45
Slide 46: Gearing performance
gearing performance 60 gearing ratio lower range upper range % 30 0 fy01 fy02 fy03 fy04 fy05 fy06 (e) 46
Slide 47: In conclusion
in conclusion • solid results – company in good financial shape • safety record improving • commissioning of major projects imminent • progress on empowerment imperative • Sasol’s technology well positioned to benefit from drive for crude oil alternatives 47
Slide 48: Sasa
Sasa a
Slide 49: 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: - Cavan Hill (+27 (0) 11 4
Slide 50: Safety remains our top priority
safety remains our top priority 3.0 recordable cases per 200 000 hours • Safety Improvement Plan (SIP) 2.0 implemented in all divisions • Life Saving Behaviours campaign launched 1.0 • RCR group target of 0.5 0 2001 Dec target 2005 50