SALIENT FEATURES
Sales volumes at Performance Chemicals up by 1%; Base Chemicals sales volumes down 1%
Benefited from start-up of HDPE joint venture facility in US, first full year of hard wax expansion project and increased alumina capacity
Product demand and US margins remain strong
Improved customer experience through our Digital Catalyst programme
Drove business readiness for the start-up of the LCCP
Looking ahead
Our strategy is to focus our Performance Chemicals portfolio on areas where we have industry-leading proprietary technologies and competitive advantage. We want to leverage low-cost feedstock to create high-value chemicals.
In the near term we will work to deliver value from the LCCP, as well as invest in capacity optimisation and differentiation across the chemicals portfolio, building on existing technology platforms. We continue to further develop the market for the new FT wax streams and look forward to the start-up of the new ethoxylation plant in China in the second half of 2019.
We are well positioned to generate value-based growth through our competitive and diverse products, application expertise and close customer relationships. In Performance Chemicals, in addition to the homecare, laundry and personal hygiene markets, our six carefully selected specialty chemical end-markets are growing strongly. We will investigate opportunities to expand our portfolio through organic incremental investments, further differentiation and carefully considered inorganic acquisitions and partnerships. In Performance Chemicals we are looking, in particular, to grow in specialty alcohols and corresponding surfactants, high and ultra-high purity alumina and FT-derived specialty waxes.
Performance summary
Higher sales volumes and stronger commodity chemical prices supported the performance of our Chemicals Business, but the stronger rand exchange rate, impact of technical and weather-related supply constraints and the start-up costs associated with our growth projects dampened gains in earnings.
We continued to focus our Performance Chemicals portfolio in line with our strategy and divested of Alexandria Wax Products Company (an Egyptian joint-stock company). Performance Chemicals sales increased 1%, benefiting from a stronger market demand and production from the expanded Fischer-Tropsch (FT) wax facilities at Sasolburg as well as from the completion of a project at Brunsbüttel that increased Sasol’s alumina hydrate production capacity. Earnings before interest and tax (EBIT) decreased by 7% to R8,2 billion.
In Base Chemicals in line with our strategy and asset review process, we disposed of our joint venture in Malaysia and realised a profit of R864 million. We continued to compete successfully based on cost-efficient value chains that are backward-integrated into ethylene and coal feedstock. Sales benefited from the start-up in November 2017 of our Gemini HDPE joint venture in the US. EBIT on a normalised basis decreased 18% to R5,2 billion.
By streamlining business processes and systems and building organisational capacity, management focused on getting the business ready ahead of the start-up of the LCCP which is on track with first steam production in July and expected start-up date of the remainder of the manufacturing units in the second half of the 2019 calendar year. We concluded the appointment of our channel distribution partners for the new US polyethylene output. A successful HDPE market entry augers well for the new LCCP polyolefin volumes. We made good progress in our Digital Catalyst programme to transform the customer experience using digital platforms, enabling closer collaboration to better anticipate customer needs and improve on their expected services. We have a long-term commitment to promote improved sustainability and the move to a lower-carbon environment.
