Sasol’s Earnings Plummet 95% Amid Impairments Affecting Profitability

Sasol, the prominent energy and chemicals company in South Africa, is facing considerable financial challenges, with a staggering 95% decline in basic earnings per share for the half-year period concluding on 31 December 2025.

Despite maintaining a consistent turnover of R122.4 billion, the company has been severely affected by a “difficult macro environment” and significant asset writedowns, which have drastically impacted its profitability.

Sasol share price

Impairments lead to billions lost

The steep decline in earnings can be traced back to a series of non-cash remeasurement items totaling R7.9 billion. This figure includes a massive R7.8 billion impairment (before tax), mainly linked to the Secunda liquid fuels refinery and gas development projects in Mozambique.

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These significant writedowns caused earnings before interest and tax (Ebit) to plummet by 52%, falling to R4.6 billion from R9.5 billion in the previous period. Consequently, headline earnings per share (Heps) decreased by 34% to R9.27.

Read:
Sasol’s profits drop due to declining oil prices and a R7.8 billion writedown
Sasol announces force majeure on natural gas supply

Dividend prospects dim as debt escalates

For the first time in four years, the group reported positive free cash flow of R0.8 billion; however, this was insufficient to boost shareholder returns. Sasol announced that it will not issue an interim dividend as its debt levels remain critically elevated.

As of December 2025, Sasol’s net debt (excluding leases) stood at R63.3 billion ($3.8 billion). According to company policy, debt must sustainably be below the $3 billion threshold before the board considers reinstating dividend payments. With a net debt-to-adjusted Ebitda ratio of 1.6 times, the company is currently focusing on reducing debt rather than distributing cash to shareholders.

A delicate recovery plan

CEO Simon Baloyi acknowledged the “macroeconomic headwinds,” emphasizing that the drop in average rand-per-barrel Brent crude oil prices (which fell by 17%) and softer US dollar-chemicals prices have exerted significant pressure.

While the group has experienced a 10% boost in production at its Secunda Operations and cut capital expenditures by 43% to R8.5 billion, these “self-help” initiatives were ultimately overshadowed by the extent of the financial downturn.

Looking ahead, Sasol has revised its forecast for the international chemicals sector downward, citing weakened market assumptions and demand. With ongoing geopolitical tensions and evolving global trade dynamics anticipated to keep the operating environment “challenging,” the company’s journey toward a full recovery remains fraught with uncertainties as it aims to stabilize its balance sheet.

Read:
Secunda stabilization provides Sasol with some breathing space
Sasol’s enduring long-term potential

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