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Shares in Sasol rise as profits look better than expected

by , 07 August 2015

This morning, Sasol released a trading update regarding its full-year results to the end of June.

Shares in Sasol responded positively to the news as the update suggests the impact of lower oil prices hasn't been as bad as first feared.

Let's take a closer look…

Sasol beats analyst forecasts

Sasol [JSE:SOL] said it expects its headline earnings for the 12 months to the end of June to be “between 14% and 19%” lower than last year, says IOL. On a per share basis, this brings headline earnings down “between R8.42 and R11.43”.

This drop in profits is “less than analysts estimated” following a hefty fall in oil prices over the period, reports BDLive. This led shares to rise “the most in more than three months”.

Over the period, Sasol has been on a drive to cut costs in a bid to offset the fall in the oil price, says Bloomberg. This includes delaying “plans to build a US gas-to-liquids plant” at a cost of around $14 billion.

The company “makes about 40% of its earnings from oil,” notes iAfrica. The fall in the oil price has had a big impact on Sasol’s profitability.

Sasol offset a dip in the oil price by boosting production and sales

Helping Sasol out over the period was a “strong operational performance,” says IOL. This includes a rise in “production and sales volumes at most of its units”,

On release of the trading update this morning, shares in Sasol rose “as much as 4.2% to R429,” adds BDLive.

At time of writing, shares in Sasol were trading 2.09% higher at R430.02.

Its results are due for release on 8 September.

So in spite of analysts expecting a poorer financial performance from Sasol due to the lower oil price, Sasol has managed to perform better than expected.

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Shares in Sasol rise as profits look better than expected
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