Sasol's CEO Discusses F2Q12 Results - Earnings Call Transcript - TheStreet

Sasol Ltd. (SSL)

F2Q12 Earnings Call

March 12, 2012 00:00 pm ET


David Constable - Executive Director & CEO

Christine Ramon - Executive Director & CFO

Giullean Strauss - Senior Group Executive - New Business Development and Technology

André De Ruyter - Senior Group Executive - Operations

Bernard Klingenberg - Group Executive, South African Energy Businesses, Excluding Sasol Mining


Gerhard Engelbrecht - Renaissance Capital

Jarrett Geldenhuys - Deutsche Bank

Caroline Learmonth - Absa Capital

Campbell Parry - Investec Securities

Alex Comer - JPMorgan

Tassin Meyer - Citigroup

Hootan Yazhari - Bank of America/Merrill Lynch

Nishal Ramloutan - UBS



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Good morning and good afternoon ladies and gentlemen and welcome to the Sasol Interim financial results conference call. Today's call is being recorded. Today's call will be hosted by David Constable, Chief Executive Officer and Christine Ramon, Chief Financial Officer.

Also on the call today will be the following members; of the group executive, André De Ruyter; Giullean Strauss; and Bernard Klingenberg. Following the formal presentation by Sasol management, an interactive Q&A session will be available. A copy of today's live presentation is available on I would now like to hand the call over to David Constable. Please go ahead, sir.

David Constable

Yeah thanks very much Careen. Good morning, good afternoon and good evening everyone and thank you for joining us on the conference call today. We are pleased to be announcing record interim earnings today at Sasol which continues our strong track record of delivering superior shareholder returns.

Turning to slide five of the presentation, which you have in front of you. Let me start with an overview of what you're going to hear today. First of all, to our financial performance, we will be announcing record interim earnings. It's always encouraging to have a positive story to tell. Our record earnings are due to the fact that we have delivered a solid operational performance supported by the macroeconomic trends.

Next, we will highlight our strategic agenda which continues to service well. In terms of our growth, the energy market dynamics continue to be supportive of our GTL value proposition as the need for energy security and energy diversification prevails globally. Here our project pipeline offers significant opportunity and is gaining traction as we continue to bring projects along into the implementation phase.

And finally the company remains an extremely compelling investment proposition. To frame our key messages, I will begin with some high-level introductory remarks, followed by Christine who will go into more detail in the financial and operational performance of our businesses.

I will then review Sasol strategies and initiatives going forward and open it up for any questions you would like to ask us.

So let's turn to slide six and start with a broader environment and how it is shaping our priorities at Sasol. Most people would agree that despite cautious optimism in 2011, it is evident that the world’s economies are still limping along and clearly this has an impact on the petrochemical, oil and gas sectors. In the short-term, the global downturn which is now in its fourth year has reduced demand, but over the longer term the trend is increasingly upwards. Driven by industrialization in the developing economies, global energy demand will continue to rise and will be approximately 30% higher by 2014. The most widely used fuels will remain oil, coal and gas. An overtime natural gas will grow dramatically versus oil.

The shift to less carbon intensive sources like natural gas and the quest for improved energy efficiency will shape demand. Energy trends will also be influenced by an increasing demand for power and by 2014, it's expected that approximately 30% of global electricity demand will be produced through natural gas. 30% of global gas production will be through unconventional sources like shale gas.

It's true that gas will continue to shape our future in more ways than one. Sasol is well positioned to benefit from this demand in growth as we move into this golden age of gas. First, we already serve many of the large growth markets in Africa, Asia and the Middle East. Second, we are the world's largest producer of synthetic fuels. Third, for more than six decades, our growth has been premised on our technical expertise in converting gas and coal into liquid fuels and chemicals.

Finally we recognize that a real and informed commitment to sustainable development is integral to achieving our long-term strategic objectives of the company with gas being a clear bridge to the future. I won’t dwell on slide seven and eight of the presentation. The slides are self-explanatory and reflect in summary terms, the positive contribution that Sasol continues to make on a number of fronts in South Africa and abroad.

Instead let's go straight to slide nine, pursuing responsible growth and ensuring sustainable operations. Safety improvement remains a strategic imperative for sustainable operations, after a record-setting 18% improvement in our 2011 financial year, we have maintained a low recordable case rate for employees and service providers at 0.43 for the half year. This is comparable to the recordable rate of 0.42 at the end of the previous financial year.

The implementation of our businesses and specific safety improvement plans are beginning to deliver positive outcomes and every effort is being made to ensure that this trend continues. Energy efficiency is obviously a top priority for Sasol and we continue to make good progress. We are on track to achieving our target of reducing energy consumption by 15% by 2015. We are also making good progress on increasing our self-generated power capacity which is expected to be at 60% by 2013.

Towards the end of last year Sasol worked with the South African government and other stakeholders as an active member of Team South Africa to ensure that COP 17, the international climate change negotiations were successfully hosted in Durban. Through our participation in various events, we were able to build awareness and the issues we faced in response to climate change challenges.

We also showcased the progress Sasol has made in moving towards lower carbon and more climate resilient economy. In particular we were able to highlight the role of gas as a bridge to a lower carbon economy and our progress with respect to improve energy efficiency. Going forward we will continue to engage with South African government and other stakeholders on climate change related policies and initiatives to find workable and sustainable solutions.

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