Sasol Ltd, South Africa’s biggest fuel producer, paid its first dividend in three years as strong demand and a rise in oil and chemical prices helped the company more than quadruple full-year earnings and pay down debt.
“Fuel differentials, refining margins and export coal prices increased to unprecedented levels during the second half of 2022,” Sasol said in a statement about its results on Tuesday.Net debt dropped to $3.8 billion for the year ended June 30 and the company will pay a final cash dividend of R14.70 per share. The stock rallied by the most in more than six weeks in Johannesburg trading.
Sasol’s net debt neared $10 billion just two years ago, after massive cost overruns at its Lake Charles Chemicals Project in the US. It’s charted a rapid recovery since, including cost-cutting and an asset-divestment program, that got another boost from energy prices that skyrocketed after Russia’s invasion of Ukraine.
Brent crude prices rose 70% and chemicals were 39% higher for the 12 months under review. While Sasol largely benefited from those increases, the group “recognized significant hedging losses” during the period. The program typically used to mitigate downside risk has been reduced for the 2023 financial year as the balance sheet deleverages, the company said.
Sasol shares jumped as much as 4.7%, the most since July 7, and were 3.8% higher as of 9:18 a.m. local time.