Sasol Limited (SSL) Updates Business Conditions and Guidance

June 28, 2012 7:24 AM EDT
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Sasol Limited (NYSE: SSL) CFO updates the business conditions and outlook for the company.

We expect the global and South African economy to maintain a modest recovery into the new financial year. However, the outcome of a number of risks, including events related to the European debt-crisis, is clouding the outlook. The United States also faces challenges to resolve its fiscal impasse. In South Africa, the policy conference of the ruling African National Congress runs from 26 June 2012 to 29 June 2012 and the party's elective conference is scheduled for the end of CY 2012.

We expect an overall solid production performance for the 2012 financial year:

1. Sasol Synfuels' volumes will be approximately 7,1 Mt; 2. Volumes from our shale gas venture in Canada will grow steadily; 3. The full-year average utilisation rate at ORYX GTL in Qatar will be in the upper 80% range of nameplate capacity; and 4. Full-year production at Arya Sasol Polymer Company in Iran will be approximately 84% of nameplate capacity.

Although the weaker rand continues to exert pressure on our South African businesses we expect that our fixed costs increase will be in line with inflation (i.e. production price index, PPI). Oil prices are expected to be volatile over the near term due to weakening demand for oil in Europe, softer growth in emerging markets and the US, as well as stronger-than-expected increases in supply. Expected currency and commodity price volatility will impact the valuation of closing balances at year end.

Based on the production guidance and macro-economic indicators, we expect to deliver increased earnings for the 2012 financial year compared to the attributable earnings of R19,8 billion in the 2011 financial year.

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