Sasol Integrated Report 2023 - Book - Page 55
INTRODUCTION
ABOUT SASOL
STRATEGIC OVERVIEW
CREATING VALUE
PERFORMANCE
GOVERNANCE AND REWARDS
ADMINISTRATION
SASOL CHEMICALS AT A GLANCE // Growing with our unique chemistry CONTINUED
A tough operating environment
which improved in the second
half of the financial year with
better production and supply
chain performance in both Africa
and America. Market demand in
Eurasia however remained weak.
Safety
Sasol Chemicals had a solid safety performance,
with all our lagging indicators improving and below
targets, except for the fires, explosions and releases
severity rate which ended slightly above target. We
also implemented technology to enable reporting,
risk assessment and incident management. The
tracking of leading indicators and combined
assurances has provided valuable insights to identify
and fix potential issues early.
Operating context
CHEMICALS AFRICA
Our Southern Africa operations, hosted by Sasol
Energy, remained the largest contributor to our
profitability.
Sales volumes were 1% higher than previous year.
This despite a planned total East factory shutdown
at Secunda site compared to only a phase shutdown
last year. The absence of the force majeure
declaration on the export of certain chemical
products following the flooding in KwaZulu-Natal,
South Africa during the last quarter of FY22 further
contributed to increased sales volumes although
second quarter sales were negatively impacted by
strike action at Transnet, South Africa’s state-owned
port and rail operator.
While supply chain challenges eased in the latter
part of the year, they remain a risk to our business,
and close collaboration with Transnet continues.
The average US$ sales basket price was 10% lower
than FY22. This is largely attributable to lower
polymer and solvents prices resulting from lower
oil prices, weaker global demand, and associated
inventory reduction by customers.
CHEMICALS AMERICA
Both operational and financial performance
improved in the second half of the year after a very
tough first half when record low margins led to a
reduction in ethylene and derivative production
rates and associated Base Chemicals’ sales volumes.
In addition, Essential Care Chemicals’ volumes were
negatively impacted by planned turnarounds as well
as the impact of the fire that occurred at the Ziegler
alcohol unit at the Lake Charles Chemicals Complex in
October 2022 which led to a force majeure
declaration on alcohols and derivatives.
During the second half of the year the force majeure
declaration on alcohols and derivatives was lifted
after all sections of the Ziegler alcohol unit started
up while ethylene and derivative margins improved
allowing production rates to be increased and
resulted in monthly production records being set
across several units at our Lake Charles Chemicals
Complex. The improved margins and production
performance saw an improvement in overall
profitability although still below levels seen in FY22.
Despite tough conditions total sales volumes
were 9% higher than FY22 mainly due to the planned
ethylene cracker turnaround and improved
production performance from the comonomers unit.
The average sales basket price was 16% lower than
FY22 due to the lower ethylene and derivative prices.
CHEMICALS EURASIA
Sales volumes within our Eurasia segment were 29%
lower than FY22, partly due to the absence of wax
volumes within our Performance Solutions division
following the disposal of the European Wax business
at the end of February 2022. After normalising for
the wax transaction, sales volumes decreased by
19% compared to FY22 due to reduced demand and
customer destocking across most of our business
divisions, while competition increased as supply
chain constraints eased post the pandemic.
Production rates at several of our units were
adjusted proactively in response to this lower
demand and to avoid inventory build.
SASOL INTEGRATED REPORT 2023
54
The average sales basket price was 4% higher than
FY22 reflecting the higher energy costs in Europe
because of the Russia/Ukraine war. Energy prices
have subsequently decreased but remain volatile
and above pre-conflict levels. Overall margins and
associated profitability remained under pressure due
to weak demand.
OUTLOOK
Because of the soft market and higher
cost of capital experienced across our
industry, we see future-proofing Sasol
Chemicals by driving continuous
improvement and efficiency as a key FY24
priority. While delivering on our Sasol 2.0
commitments, we have unlocked
significant value, enhancing our operations
and making our business more marketand customer-oriented.
Sasol Chemicals is led by an experienced
team that has successfully managed
through both up and down cycles in our
business. Our focus on safety, operational
excellence, capital discipline, cost
management, customer service and
continuous improvement will help ensure
that we can deliver results regardless of
the cycle and be ready to grow smartly
when market conditions improve and
opportunities present themselves.
