10 September 2012 15:18 [Source: ICIS news]
LONDON (ICIS)--South Africa-based Sasol reported on Monday that the operating profit from its polymers' division for the fiscal year 2012 ended 30 June fell by 55% year on year to rand (R) 716m ($88m), despite a 1% year-on-year rise in overall polymer sales volumes.
Sales tonnage grew from 1.78m tonnes/year in the group's fiscal year ended 30 June 2011 to 1.80m tonnes/year in 2012, while sales tonnage for the second half of its fiscal year 2012 was at 921,000 tonnes/year, revealing a 5% rise compared with 880,000 tonnes/year in the first half.
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Sasol's international polymer operations (see table below for regional polymer production information) contributed R937m to its operating profit. However, the company said it recognised translation losses of R480m, primarily because of an exchange rate adjustment at its ASPC operations.
In addition, the group said its operating profits suffered from negative margins at its local South African polymer business and sluggish international polymer markets.
Quoting ICIS low density polyethylene (LDPE) injection free on board (FOB)
"Operating profit was positively impacted by a 1% increase in overall sales volumes; however, this increase was negated by the slowing of the international polymer market, coupled with the continued margin squeeze experienced in the South African polymer business, where feedstock price increases outweighed the increases in selling prices," the company said.
Looking ahead, the company said the ethylene purification unit project in Sasolburg, South Africa, which will yield additional ethylene to support its polymer plants to run continuously, is expected to be in operation in the 2013 calendar year, at an estimated cost of R1.8bn.
Upstream, Sasol Synfuels improved its overall production run-rate during the second half of the year, "being the best performance in the last five years," the company said. Sasol Synfuel provides feedstock supply for the group's polymers business.
The company elaborated on the year-on-year capacity utilisation at Sasol Synfuels: "Production volumes were 1.1% higher than the prior year, due to improved plant efficiencies and fewer plant instabilities, coupled with a phased shutdown compared to the full shutdown in 2011."
Looking ahead, it said: "The Sasol Synfuels growth programme is progressing well with the gas turbines, 10th Sasol advanced synthol reactor, and 16th oxygen train delivering in line with expectations. Construction on the gas heated heat exchange reformers project continues. In related projects, two of four new gasifiers were commissioned successfully, with the 17th reformer reaching beneficial operation in May 2012."
Overall, Sasol's chemical cluster's turnover in its fiscal year 2012 grew by 14% year on year to R94.8bn, the Johannesburg-based energy and petrochemical major said.
Sasol group posted a 23% increase in operating profit for the twelve-month period ended 30 June to R36.8bn, while the firm's total turnover rose by 19% to R169.45bn, it added.
CEO David Constable said: "We have delivered strong results with record dividends, despite continuing global economic uncertainty and certain production challenges in the first half of the financial year."
Sasol's polymer production capacity for the year ended 30 June (Source: Sasol)
($1 = R8.18)
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