Sasol Share Price JSE: SOL Attempts Break Higher on Operational Improvements, Despite Earnings Sinking
Despite increasing output and fortifying its hedging program, Sasol Limited reported a steep drop in earnings as lower oil prices severely..
Quick overview
- Sasol Limited experienced a 95% decline in net income to 241 million rand due to weaker oil prices and significant impairments.
- Despite the earnings drop, the company generated positive free cash flow and reduced capital expenditure, indicating improved financial discipline.
- Operationally, Sasol improved output and raised its 2026 fuel sales guidance after regaining control of its Natref refinery.
- The company is advancing its renewable energy strategy while maintaining a hedging program to mitigate risks from volatile oil markets.
Despite increasing output and fortifying its hedging program, Sasol Limited reported a steep drop in earnings as lower oil prices severely reduced profitability.
Profit Nearly Wiped Out
Sasol’s net income plunged 95% to 241 million rand ($15 million) in the six months through December, down from 4.6 billion rand a year earlier. The dramatic decline underscores the company’s vulnerability to global crude price movements, which heavily influence the value of its fuel and chemical products.
Lower oil prices weighed significantly on margins, while macroeconomic headwinds added further strain. The company also recorded a R3 billion impairment at its Secunda Liquid Fuels business, compounding the earnings pressure.
Despite the weak profitability, Sasol generated positive free cash flow and reduced capital expenditure sharply, signaling improved financial discipline. However, net debt remains elevated, and earnings before interest and tax were heavily impacted by impairments.
Operational Improvements Provide Some Relief
Operationally, Sasol delivered stronger output. Measures to improve coal quality contributed to higher production levels, and Secunda volumes increased during the period. The company also ensured a reliable supply of jet fuel to OR Tambo International Airport, reinforcing its role in South Africa’s energy infrastructure.
In addition, Sasol raised its 2026 fuel sales guidance after completing repairs and regaining full control of its Natref refinery, which had been severely damaged by a fire last year.
Chief Executive Officer Simon Baloyi emphasized that strategic actions are strengthening the core business and building resilience amid volatile global markets.
Hedging and Transition Strategy
Sasol has completed its 2026 hedging program with an oil price floor of $59 per barrel and is already more than 45% hedged for the 2027 financial year. The company also maintains currency hedges, benefiting when the rand weakens against the U.S. dollar.
On the energy transition front, Sasol has shifted away from increasing gas usage and instead accelerated renewable energy adoption and carbon offsets. It has secured more than 1,200 megawatts of renewable energy capacity, progressing toward a 2,000-megawatt target by 2030.
Technical Levels Come Back Into Focus
From a technical standpoint, Sasol’s chart suggests a trend reversal in 2026 after being bearish since 2022. In August, the stock successfully reclaimed its 50-week simple moving average (yellow), reigniting buying interest and confirming a medium-term trend shift. That level, currently around R100, has since acted as a key support zone and it held srong despite the temporary piercing below it.
SOLJ Chart Weekly – Buyers Trying to Push Above the 100 SMA
However, rallies repeatedly stalled near the 100-week moving average (green), which rejected the bounces higher. But buyers pushed the share price above it again in February as Oil prices jumped on the US/Israel-Iran rhetoric, which opens the door for R177 now where the 200 SMA (purple) stands.
SOLJ Chart Monthly – The 200 SMA Held As Support
On the monthly chart above the 20 SMA (gray) was acting as a resistance indicator, which was rejected the price but we’re seeing a clear break this month.
Sasol 2025 Earnings Report
📊 Financial Performance
Adjusted EBITDA:
- Declined 12% YoY to R21 billion
- Impacted by weaker commodity prices and a stronger rand
Cost Discipline:
- Cash fixed costs down 2% to R34 billion
- Capital expenditure reduced 43% to R8.5 billion
Free Cash Flow:
- Positive R0.8 billion
- First positive FCF in four years
- Improvement of more than 100% versus the prior period
Impairments:
- Total impairments of R7.8 billion
- R3.0bn (Secunda)
- R3.9bn (Mozambique PSA)
- R0.5bn (CTT)
- EBIT declined 52%
Net Debt:
- Stood at US$3.8 billion
- Slightly above long-term target of below US$3 billion
- Year-end target set below US$3.7 billion
⚙️ Operations & Safety
- Management highlighted safety focus following a fatal incident
- Secunda production increased 10%
- De-stoning plant now operating at full capacity
- Gas startup delays and revised PSA volumes slowed monetization
- Throughput remained constrained despite operational improvements
🌱 Grow and Transform Strategy
- Over 1.2 GW of renewables contracted toward 2 GW by 2030 target
- Secured approximately 9 million tonnes of carbon offsets
- Zaffra JV awarded EUR 350 million grant
- Targeting ~2,000 barrels per day eSAF production
- First production expected around 2030
Conclusion: While Sasol’s operational gains and disciplined financial management offer some stabilization, the collapse in profit highlights the company’s ongoing exposure to volatile oil markets. Hedging and renewable expansion provide a buffer, but sustained crude weakness remains a significant risk to earnings recovery.
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