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UPDATE 2-Sasol's earnings hit by low oil price, says outlook uncertain

Published 2016-09-12, 08:10 a/m
© Reuters.  UPDATE 2-Sasol's earnings hit by low oil price, says outlook uncertain
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* Company earnings down 17 percent, in line with guidance

* $680 mln write-down on Canadian shale assets

* Mozambique gas project in early stage of execution (Updates with details)

Sept 12 (Reuters) - South African energy and chemicals group Sasol SOLJ.J reported a 17 percent fall in full-year earnings on Monday due to lower crude oil prices and said the economic environment it operates in remained "volatile and uncertain".

Sasol's earnings were also hit by a writedown of 9.9 billion rand ($680 million) on its Canadian shale gas project, an impairment which had stood at 7.4 billion rand when the group released its interim results in March.

"In order to manage the shale gas asset through the low gas price environment, we concluded an agreement with our partner, Progress Energy, to settle the outstanding funding commitment of 4.16 billion rand and reduce the pace of appraisal, development and drilling activities," Sasol said.

Sasol also said the lower oil price had a "significant impact" on its interest in offshore Gabon oil production, resulting in a loss of 994 million rand compared with a 1.124 billion loss in the prior year.

The company has reduced its headcount to 30,000, a 15 percent decrease from 2013, as part of a restructuring drive and a response to the lower oil price, and the company said it expected it workforce to remain at around that number.

Sasol said it had reaped 28 billion rand of cash savings for the year, exceeding an original target of 16 billion rand, and was targeting savings of 65 to 75 billion rand by 2018.

Headline earnings per share fell 17 percent at 41.40 rand ($2.87), in the middle of the range that the company had flagged to the market.

Joint Chief Executive Stephen Cornell said he saw a limited impact from an almost three-week strike by the Association of Mineworkers and Construction Union (AMCU) at its Secunda coal mines. Four other unions have accepted a 7 percent wage hike offer there.

"The operations are normal, we have been able to continue our production relatively unaffected," Cornell said on a media conference call.

The company has cut the final gross dividend by 21 percent to 9.10 rand per share. Source text for Eikon: ID:nJseL0002a Further company coverage: SOLJ.J ($1 = 14.4325 rand)

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