Sasol Limited Q2 FY2024 earnings call

Safety: Period had 4 fatalities, recordable case rate improved but work stoppages due to safety incidents. ### Operational Improvements: Worked on Sasol 2.0 improvement program but hampered by SOE underperformance and plant stoppages. ### Mozambique Projects: Gas drilling yielding positive results, PSA project on track with commissioning readiness expected end of 2024. ### Financials: Adjusted EBITDA down 12%, net debt up to $4.6 billion, cash generated by operations declined by 31%.

Energy Business: Mining saw a 39% decline in adjusted EBITDA due to lower export coal prices, higher external coal purchases, and safety incidents. Gas business adjusted EBITDA was down 19% due to high gas costs. Fuel segment adjusted EBITDA decreased by 1% with lower liquid fuel sales but higher refining margins. Chemicals Business: Chemicals Africa had a 44% decline in adjusted EBITDA. Chemicals America saw over 100% increase in adjusted EBITDA. Chemicals Eurasia adjusted EBITDA decreased by 84% due to low market demand.

Chemicals: Expect demand recovery in second half. ### Mining: Productivity guidance between 975-1100 tons per continuous miner per shift, lower end expected. ### Gas: Volume guidance 113-119 billion standard cubic feet for 2024. ### Fuel: Secunda operations expected to meet 7-7.3 million tons guidance, liquid fuel sales 51-54 million barrels.

Macro Uncertainties: High inflation, weak economic growth. ### SOE Issues: Underperformance of state-owned enterprises in value chain. ### Safety: Plant safety-related production stoppages. ### Supply Chain: Challenges with Transnet in South Africa. ### Regulatory: Gas price, environmental compliance challenges in South Africa.

Q: Can you take us through how you reached a dividend of ZAR2 per share that seems to be out of balance with the indicated dividend cover in the capital allocation strategy?

A: Hanre Rossouw explained that the current dividend policy links to core headline earnings, but they are reviewing it to link to free cash flow. The ZAR2 per share interim dividend is a vote of confidence in free cash flow generation for the full year.

Q: What is the expected impact of Oryx Trains 1 and 2 being offline for longer than planned?

A: Fleetwood Grobler said the operating rate guidance is now between 55% and 65% for the year, and work is ongoing to scope and complete the repair.

Q: Can you confirm what you're actually physically going to be paying that bond maturity out of? Will you be drawing down on the revolver?

A: Hanre Rossouw stated they have over $5 billion in liquidity, including undrawn RCF, and can comfortably redeem the $1.5 billion bond through a drawdown of the RCF.

Q: Is it not time to have an honest conversation with the cabinet of South Africa to articulate the full economic and social implication of full compliance with the current climate change trajectory?

A: Fleetwood Grobler said they are engaging with all stakeholders and will continue discussions to provide context on the implications of different climate change paths.

Q: How does management prioritize what to focus on to steady the ship and where would you say you see the easy wins over the next 6 to 12 months?

A: Simon Baloyi said the first priority is business performance and operational stability, with focus on optimizing gross margin and managing costs, expecting easy wins in cash generation in the second half.