SSL — Sasol Limited

Summary of Sasol's Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted EBITDA: Decreased year-on-year due to challenging macro conditions, but cash flow levers were effective, resulting in positive free cash flow for the first time in four years.
• Net Debt: Ended at USD 3.8 billion, slightly above the target of below USD 3.7 billion by year-end.
• Cash Breakeven Price: Southern Africa value chain cash breakeven price improved to USD 53 per barrel, ahead of the full-year target of USD 55-60 per barrel.
• Capital Expenditure: Revised guidance lowered to ZAR 22-24 billion, reflecting a 43% decrease year-on-year, primarily due to the absence of a phase shutdown.
• Earnings Before Interest and Tax (EBIT): Decreased by 52%, impacted by non-cash remeasurement items, including impairments totaling ZAR 7.8 billion.

2. Strategic Updates and Business Highlights

• Safety Initiatives: Despite a tragic fatality in September 2025, improvements in safety indicators were noted, with a focus on enhancing safety culture and accountability.
• Operational Improvements: The destoning plant in Secunda achieved beneficial operation, improving coal quality and supporting stable operations.
• International Chemicals: Adjusted EBITDA improved year-on-year despite market challenges, with a focus on cost reductions and operational efficiencies.
• Renewable Energy Initiatives: Secured an additional 300 megawatts of renewable energy, bringing the total to over 1.2 gigawatts, with a target of 2 gigawatts by 2030.

3. Forward Guidance and Outlook

• Full-Year Guidance: Adjusted EBITDA guidance for the full year revised to USD 375-450 million, with margin outlook adjusted to 8-10%.
• Deleveraging Pathway: Continued focus on reducing net debt, with expectations of achieving the target by FY '28, depending on macro conditions.
• Production Expectations: Anticipated higher sales volumes in the second half of FY '26, with a focus on optimizing product placement and maximizing value.

4. Challenges and Points of Concern

• Market Conditions: Weaker chemical pricing, higher feedstock costs, and elevated energy prices in Europe are impacting profitability.
• Impairments: Significant impairments recorded on the Secunda liquid fuels refinery and Mozambique PSA gas development due to revised production profiles and exchange rate impacts.
• Operational Risks: Delays in the CTT gas-to-power project and ongoing challenges in gas production profiles may affect future cash flows and operational stability.
• Safety Concerns: The recent fatality underscores ongoing safety challenges within operations.

5. Notable Q&A Insights

• Secunda Volumes: Management expressed optimism about achieving top-end guidance sooner than expected, contingent on maintenance schedules and gasifier refurbishments.
• Carbon Tax Discussion: Management emphasized the importance of a balanced approach to carbon tax implementation, advocating for a recycling mechanism to support transition efforts.
• Hedging Strategy: The company is utilizing a mix of hedging instruments, including put spreads and zero-cost collars, to manage oil price and currency risks effectively.
• International Chemicals Outlook: Confidence remains in achieving FY '28 EBITDA targets, driven by self-help measures and operational efficiencies despite current market pressures.

This summary encapsulates the key points from Sasol's Q2 2026 earnings call, highlighting financial performance, strategic initiatives, and challenges faced by the company.