South African petrochemical group's profit drops as power outages hit production

JOHANNESBURG, (Reuters) - South African petrochemicals group Sasol said full-year profit dropped 6 percent, pulled down by interruptions to production, a stronger rand and employee share-based payment expenses.

Core headline earnings per share (HEPS) for the year ended June 30 fell to 36.03 rand ($2.46) compared with 38.47 rand a year earlier. HEPS is the main profit gauge in South Africa, which strips out certain one-off items.

The firm said its financials were affected by unplanned electricity supply interruptions from state-owned power utility Eskom and two internal outages at its Secunda Synfuels and Natref operations that resulted in lower production.

A stronger average rand-to-dollar exchange rate compared with a year earlier also hurt results, Sasol said, while expressing optimism about operations in the coming year.

“2019 will be a defining year for Sasol with the start-up of the LCCP in the US, a catalyst for transforming our earnings profile,” Chief Executive Officer Stephen Cornell said in a statement.

The Lake Charles Chemicals project (LCCP) ethane cracker in North America, which has been hit by delays and rising costs, is about 88 percent complete and is expected to cost $11.13 billion, the firm said.

Sasol, the world’s top manufacturer of motor fuel from coal, said earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10 percent to 52 billion rand ($3.55 billion).

The difference between core headline earnings and EBITDA was due to depreciation costs of 16 billion rand and employee share-based payment expenses of 1.5 billion rand, Sasol said.

The company declared a final dividend of 7.90 rand per share, up 1.3 percent year-over-year. That brings its total dividend declared for the period to 12.90 rand per share, compared with 12.60 rand per share a year earlier. ($1 = 14.6363 rand) (Reporting by Tanisha Heiberg, Editing by Sherry Jacob-Phillips and Sai Sachin Ravikumar)

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