On September 1, Sasol Limited (NYSE:SSL) posted fiscal 2026 results that looked nothing like the shaky operator investors have grown used to. Net debt fell to its lowest level in ten years, Secunda output hit a five-year high, and adjusted EBITDA jumped 17% year over year to ZAR 61 billion. The numbers suggest a turnaround that finally has traction, even as chemical markets stay stuck in a rut.
The clearest thread running through the quarter is that Sasol's core Southern African operations are simply working better than they have in years. Secunda production reached 7.26 million tonnes, a five-year high, driven by improved coal quality and gas availability after the company installed a destoning plant that pushed sinks below 12%. That reliability helped cut the Southern African oil breakeven to $49 per barrel. Management is also weaning the business off external coal, planning to cut purchases from 8.8 million tonnes down to a range of 5 million to 7 million tonnes in fiscal 2027 as own production climbs toward 34 million tonnes by 2028.
The balance sheet tells a similar story. Net debt dropped 11% to $3.3 billion, and available liquidity rose 21% to roughly $5 billion after a bond swap that better matched debt currency to cash generation. Free cash flow of ZAR 11.9 billion was actually up 26% once you strip out a one-time legal settlement from the prior year. International Chemicals, long the drag on the portfolio, posted $604 million in adjusted EBITDA on a 7% cut in fixed costs and a stronger fourth quarter market. Retail fuel market share climbed to 13% from 9% five years ago, and renewable capacity reached 500 megawatts on the way to a 2 gigawatt target by 2030.
Not everything is fixed. Sasol lost two colleagues during the year, a reminder that operational improvement has not erased safety risk. Currency remains a persistent headwind, with CFO Walt Bruns noting that "the stronger rand remained a significant earnings headwind given the U.S. dollar-linked nature of much of our revenue." That same stronger rand outlook, combined with weaker long-term polyethylene pricing, drove impairments on the Secunda liquid fuels refinery and the South African polyethylene unit.
Management was explicit that global chemical markets have not turned a corner, warning that "excess capacity and weaker demand" continue pressuring prices with only a gradual recovery expected. Working capital also ran hot at 18.3% of trailing turnover, above the 15.5% to 16.5% target range, due to pricing volatility and elevated inventory. Fiscal 2027 capital spending guidance of ZAR 23 billion to ZAR 26 billion is also higher than the year just completed, and dividends stay off the table until net debt is sustainably below $3 billion, a threshold the company has approached but not yet crossed.
#debt #fiscal #years #five
The clearest thread running through the quarter is that Sasol's core Southern African operations are simply working better than they have in years. Secunda production reached 7.26 million tonnes, a five-year high, driven by improved coal quality and gas availability after the company installed a destoning plant that pushed sinks below 12%. That reliability helped cut the Southern African oil breakeven to $49 per barrel. Management is also weaning the business off external coal, planning to cut purchases from 8.8 million tonnes down to a range of 5 million to 7 million tonnes in fiscal 2027 as own production climbs toward 34 million tonnes by 2028.
The balance sheet tells a similar story. Net debt dropped 11% to $3.3 billion, and available liquidity rose 21% to roughly $5 billion after a bond swap that better matched debt currency to cash generation. Free cash flow of ZAR 11.9 billion was actually up 26% once you strip out a one-time legal settlement from the prior year. International Chemicals, long the drag on the portfolio, posted $604 million in adjusted EBITDA on a 7% cut in fixed costs and a stronger fourth quarter market. Retail fuel market share climbed to 13% from 9% five years ago, and renewable capacity reached 500 megawatts on the way to a 2 gigawatt target by 2030.
Not everything is fixed. Sasol lost two colleagues during the year, a reminder that operational improvement has not erased safety risk. Currency remains a persistent headwind, with CFO Walt Bruns noting that "the stronger rand remained a significant earnings headwind given the U.S. dollar-linked nature of much of our revenue." That same stronger rand outlook, combined with weaker long-term polyethylene pricing, drove impairments on the Secunda liquid fuels refinery and the South African polyethylene unit.
Management was explicit that global chemical markets have not turned a corner, warning that "excess capacity and weaker demand" continue pressuring prices with only a gradual recovery expected. Working capital also ran hot at 18.3% of trailing turnover, above the 15.5% to 16.5% target range, due to pricing volatility and elevated inventory. Fiscal 2027 capital spending guidance of ZAR 23 billion to ZAR 26 billion is also higher than the year just completed, and dividends stay off the table until net debt is sustainably below $3 billion, a threshold the company has approached but not yet crossed.
#debt #fiscal #years #five
9 hours ago
