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Sasol Limited SSL closed up 10.12% in Monday's trading, as shares were swept up in the excitement over the South African integrated energy company’s increased coal exports. It seems that despite a 2% decline in saleable coal production, Sasol's focus on operational efficiency has started to pay off.
Production and Sales Metrics: A Year in Review
Sasol's total mining production for fiscal 2024 (ended Jun 30, 2024) rose by 3% year over year, thanks to improved operations at Thubelisha colliery and better performance at Transnet Freight Rail. This growth is a testament to the company’s dedication to enhancing productivity across its mining operations. Although saleable coal production decreased by 2%, Sasol managed to increase its export sales volumes by 5% over fiscal 2024.
Positive Trends in Mozambique Gas Production
Sasol’s gas production in Mozambique increased by 6% in fiscal 2024, surpassing market expectations. The early start of production from the PSA initial gas facility in May significantly contributed to this growth. Additionally, natural gas and methane-rich gas sales volumes in South Africa rose by 4% and 7%, respectively, due to higher production and increased external demand.
Secunda Operations and Liquid Fuels
Production volumes at Sasol's Secunda operations were up 1% year over year. This slight improvement was primarily due to a phased shutdown in fiscal 2024 compared to a total shutdown in the previous period. However, liquid fuels sales volumes were 4% lower than the previous year, impacted by continued challenges in the South African diesel market and strategic inventory optimization.
Challenges in the Chemicals Business
Sasol's chemicals segment faced a tough year, with sales revenues from its South African operations down 11% due to lower prices. The average sales basket price dropped 13% from fiscal 2023, reflecting weaker global demand and lower oil prices. Similarly, Sasol's U.S. chemical assets saw a 12% decline in sales revenues despite a 3% increase in sales volumes.
Looking Ahead
Sasol — a leading provider of liquid fuels in South Africa and a major international producer of chemicals — is set to release its financial results for fiscal 2024 on Aug 20, along with its outlook for fiscal 2025. Investors will be keen to see how the company plans to navigate the ongoing challenges in the energy market while capitalizing on operational improvements and strategic initiatives.
Sasol carries a Zacks Rank #3 (Hold) at present.
3 Energy Stocks to Buy
Investors interested in the energy sector might consider operators like SM Energy Company SM, Sunoco LP SUN and Tullow Oil TUWOY. SM Energy and Sunoco currently sport a Zacks Rank #1 (Strong Buy) each, while Tullow carries a Zacks Rank #2 (Buy) each.
You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company: SM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. SM Energy has a trailing four-quarter earnings surprise of 13.8% on average.
SM is valued at around $5.4 billion. SM Energy has seen its shares increase 35% in a year.
Sunoco LP: The Zacks Consensus Estimate for 2024 earnings of Sunoco indicates 99.7% growth.
SUN is valued at around $5.8 billion. Sunoco has seen its stock rise 28.5% in a year.
Tullow Oil: TUWOY is valued at some $605.1 million. Over the past 90 days, the Zacks Consensus Estimate for 2024 earnings has increased 20%.
Tullow Oil enjoys a Value and Growth Score of A and B, respectively, each helping it round out with a VGM Score of A. TUWOY shares have gained 4.1% in a year.