Sasol NYSE: SSL reported stronger financial and operating performance for fiscal 2026, citing improved reliability across its Southern African value chain, cost discipline, stronger refining margins and progress in its International Chemicals reset.
Adjusted EBITDA increased 17% to ZAR 61 billion, while gross margin rose 13%. The company generated ZAR 11.9 billion in free cash flow under its capital-allocation framework, down 5% from the prior year but up 26% when excluding a once-off Transnet legal-settlement benefit recorded in fiscal 2025.
“The stronger result was not simply market-driven,” Chief Financial Officer Walt Bruns said. He attributed the results to improved operations, strict cost management and disciplined capital allocation, alongside more supportive market conditions in the second half.
Balance Sheet Strengthens as Capital Spending Falls
Net debt declined 11% to $3.3 billion, its lowest level in a decade and below Sasol’s fiscal 2026 target of less than $3.7 billion. Available liquidity increased 21% to about $5 billion. The company remains targeting sustainably reducing net debt below $3 billion between fiscal 2027 and fiscal 2028, which is also the threshold it has set for resuming dividends.
Capital expenditure fell 18% to ZAR 21 billion, reflecting completed projects in Mozambique and South Africa as well as the absence of a Secunda phase shutdown during the year. Bruns said Sasol’s fiscal 2027 capital guidance implies a cumulative ZAR 12 billion to ZAR 14 billion reduction from ranges presented at its Capital Markets Day, with about half resulting from sustainable scope and cost improvements.
Cash fixed costs were flat despite inflation, extending Sasol’s record of absorbing inflation through cost initiatives for three consecutive years. Sales volumes increased 4%.
Working capital measured 18.3% of 12-month turnover, above the company’s 15.5% to 16.5% target range. On a six-month annualized turnover basis, it was 16.6%. Bruns said roughly 60% of the increase was related to higher commodity prices, 30% to Sasol’s use of Prax’s capacity at Natref during its business rescue process, and about 10% to volumes. The company expects part of the inventory-related increase to unwind during the first quarter of fiscal 2027.
Southern African Operations Improve
President and CEO Simon Baloyi said Secunda production reached a five-year high of 7.26 million tons, supported by improved coal quality, gasifier availability and more stable operations. The company’s destoning plant helped reduce coal “sinks” below 12%, a target Sasol had outlined previously.
The Southern African oil breakeven declined to $49 per barrel. Bruns said the calculation includes variable and fixed costs as well as capital expenditure, while giving credit for refining margins and chemical prices. The result benefited by an estimated $6 to $9 per barrel from the absence of a Secunda shutdown and conditions related to the Middle East conflict.
Sasol Mining purchased 8.8 million tons of external coal in fiscal 2026 and expects to purchase between 5 million and 7 million tons in fiscal 2027. Head of Mining Sandile Siyaya said the company aims to supply 34 million tons from its internal collieries by fiscal 2028.
Natref delivered stable performance and benefited from stronger refining margins and fuel differentials. Sasol said it adjusted refinery operations to source more crude from Latin America and West Africa, reducing dependence on sour crude. Christian Herrmann, executive vice president of marketing and sales for energy and chemicals, said Sasol’s retail market share increased to about 13%, from 9% five years earlier, while the overall retail market declined during the year.
International Chemicals Posts Higher Earnings
International Chemicals generated adjusted EBITDA of $604 million, aided by cost savings, improved commercial execution and a more supportive fourth-quarter market environment. The segment maintained a 16% contribution to group EBITDA.
Head of International Chemicals Antje Gerber said fiscal 2027 guidance of $450 million to $600 million assumes that favorable market effects linked to Middle East disruptions in late fiscal 2026 will not repeat. The company continues to face structural challenges from oversupply, weaker demand, elevated European energy costs and Chinese exports.
Sasol restarted its paraffin unit in Augusta in August to respond to supply constraints and customer demand for paraffin and linear alkylbenzene components. Gerber said the restart does not change the company’s target to cut International Chemicals cash fixed costs by 15% to 20% by fiscal 2028. She said the business has reduced those costs by 10% since fiscal 2024.
The company also highlighted its alumina business as its highest-margin International Chemicals operation, with an EBITDA margin of approximately 25% to 30%. Sasol is expanding the business at Brunsbüttel, with Gerber saying the investment is supported by customer demand and commitments.
Safety and Transition Strategy Remain Priorities
Baloyi said Sasol recorded the deaths of two colleagues during the year, Godfrey Mamafha and Sonwabo Makamba. The company introduced targeted action plans focused on leadership accountability, risk identification and safety ownership. Sasol said hospitalizations fell to record lows and that it recorded no major process-safety incidents during the year.
On its growth and transformation strategy, Sasol said it has secured more than 1.3 gigawatts of renewable energy and has more than 500 megawatts operational in South Africa. The company is targeting 2 gigawatts by fiscal 2030.
Sasol also said Natref became the first refinery in Africa to receive product sustainability certification for key fuel-production pathways, alongside certified chemicals production at Secunda. Baloyi said the company will continue to assess energy-transition opportunities through a “pragmatic and value-accretive” approach while prioritizing operational reliability, cash generation and deleveraging.
About Sasol (NYSE:SSL)
Sasol Limited is an integrated energy and chemical company headquartered in Johannesburg, South Africa. The company's core operations encompass the conversion of natural gas, coal and heavy hydrocarbons into liquid fuels and a wide array of chemical products. Sasol leverages proprietary Fischer-Tropsch and gas-to-liquids (GTL) technologies to deliver cleaner-burning diesel, jet fuel and naphtha, alongside solvents, surfactants and specialty polymers for industrial and consumer applications.
In addition to its GTL business, Sasol operates downstream facilities for the manufacture of alpha olefins, ethylene, propylene and other base-chemical intermediates.
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