Sasol Limited Q2 FY2026 earnings call

• Safety: Tragic fatality in September was unacceptable. Investigation identified gaps, leading to actions like strengthening leadership and personal accountability, reinforcing standards, etc. Leading indicators improving but safety culture still needs strengthening.
• Operational delivery in Southern Africa: Focus on coal quality, reliability, and disciplined maintenance restoring stability. Secunda production up 10% year-on-year, Natref operational performance improved.
• International Chemicals: Reset progressing, markets tough but internal actions delivering structural cost improvements, with revised full year adjusted EBITDA and margin guidance.
• Cash flow and balance sheet resilience: Generated positive free cash flow despite challenging macros, net debt at USD 3.8 billion, continuing focus on cash generation and deleveraging.
• Grow and Transform strategy: Secured additional 300 MW renewable energy, total over 1.2 GW towards 2 GW by 2030; contracted ~9 million tonnes carbon offsets over 3 years; renewable diesel certification nearing completion.

Southern Africa value chain: Mining's destoning plant reached beneficial operation, improving coal quality but external coal purchases were high in first half with expectation to decrease in second half. Gas saw CTT gas-to-power project delay in Mozambique affecting PSA volumes and causing PSA impairment, with efforts to optimize gas production profile. Secunda production increased by 10% year-on-year supported by coal quality and gasifier availability. Natref operational performance improved. Chemicals Africa focused on ramping up sales. International Chemicals: Adjusted EBITDA increased year-on-year despite challenging markets but margins under pressure, leading to revision of full year adjusted EBITDA and margin guidance. Revenue contribution: Southern Africa value chain remains significant contributor with International Chemicals' contribution increasing over time.

• International Chemicals: Revised full year adjusted EBITDA guidance from USD 375 million to USD 450 million, margin guidance to 8%-10%.
• Net debt: On track to achieve net debt below USD 3.7 billion by year-end, though slightly above target in first half, with second half cash generation expected higher. Originally target to reach net debt below USD 3 billion between FY '27 and '28, now likely delayed to FY '28 due to macro conditions.
• Capital expenditure: Revised full year capital guidance ZAR 2 billion lower to ZAR 22 billion to ZAR 24 billion, no deferral to later years.

• Macroeconomic volatility: Oil price fluctuations, stronger rand affecting earnings, etc.
• International Chemicals challenges: Continued global overcapacity, softer demand, tariff uncertainty impacting pricing and margins.
• Mozambique gas project risk: CTT gas-to-power project delay affecting PSA volumes and causing impairment.
• Safety risk: Ongoing need to maintain strong safety culture to avoid accidents.

Q: Regarding Secunda volumes, breakeven price, carbon tax, and MRG pricing.

A: Simon Baloyi noted Secunda volumes near high end of guidance, Victor Bester to detail gasifier refurbishments. On carbon tax, Sasol believes in proper implementation with recycle mechanism. MRG pricing submitted, NERSA process ongoing.

Q: On degearing, CapEx, debt repayment.

A: Walt Bruns said guiding to reduce net debt below USD 3.7 billion by year-end, CapEx second half higher due to no phase shutdown and program completion, proactive approach to debt repayment including DMTN repayment.

Q: On International Chemicals operations, gas PSA impairment, Prax agreement.

A: Simon Baloyi and Antje Gerber discussed International Chemicals focus on value over volume, gas PSA impairment due to CTT delay and unit restrictions, Prax agreement allowing utilization of Natref capacity.

Q: On renewable energy grant, EBITDA to cash movement.

A: Sarushen Pillay said EU e-SAF project plant to produce ~40,000 tonnes SAF by 2030, Walt Bruns noted non-cash movements in EBITDA to cash reconciliation.

Q: On SA ops EBITDA, hedging strategy.

A: Walt Bruns said no significant EBITDA decrease in SA business, hedging 25%-30% of rand-dollar exposure, details on hedging instruments like puts, collars used.