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Sasol (File photo)
South African petrochemicals group Sasol said on Monday it was scaling back planned capital expenditure this year in the face of a strengthening rand as it posted a fall in interim earnings partly rooted in the currency’s gains.
* Sasol said it was revising its capex estimate for the full year to 66 billion rand ($5 billion) from 75 billion rand “largely due to the impact of the stronger rand/U.S. dollar exchange rate coupled with our cash conservation initiatives and active management of our capital portfolio.”
* Sasol’s products are priced in dollars but much of its costs are rand-based. Forex movements also have valuation implications for the company’s balance sheet.
* Half-year headline earnings per share (HEPS) decreased 38 percent to 15.12 rand, in line with what the company previously flagged to the market.
* Sasol attributed the decline to rand gains and to a strike at its Secunda mining operations.
* Net cash position decreased from 52 billion rand in June 2016 to 28 billion rand at Dec. 31, 2016, mainly due to the funding of the company’s ethane cracker project in Louisiana and the effect of a stronger rand/U.S. dollar exchange rate.
* Board declared a gross interim dividend of 4.80 rand per share, 15.8 percent lower compared with the prior period.
* In Mozambique, the company said it has completed four wells as part of its drilling campaign which are “showing promising results.” ($1 = 12.9615 rand)
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