Our Chemicals business continued to face challenging market conditions with macro-economic weakness especially in China and Europe
Sasol’s H1 FY24 performance continued to be impacted by a volatile macro-economic environment, with weaker oil and petrochemical prices, unstable product demand and continued inflationary pressure. Persistent underperformance of state-owned enterprises in South Africa remains a concern, as does the outlook for weaker global growth. Pricing pressure continues to impact sales volumes, margins and resultant profitability.
In the Energy Business, H1 FY24 performance improved compared to H1 FY23, due to higher production and productivity since the implementation of the operational mitigation plans compared to the prior year. At SO, we have seen increased production volume, mainly due to a phase shutdown versus a total shutdown in the prior year, improved equipment availability and operational stability. Notwithstanding the operational improvements achieved, rand oil price and inflationary pressure continue to impact our liquid fuels segment.
Our Chemicals business continued to face challenging market conditions with macro-economic weakness especially in China and Europe, and customer destocking negatively impacting global demand, similar to what global peers are experiencing. The average sales basket price for H1 FY24 was 24% lower than H1 FY23, with the decrease driven by a combination of lower oil, feedstock and energy prices and the afore-mentioned weak market demand. While the average sales basket price for Q2 FY24 was 6% higher than Q1 FY24 prices, margins and associated profitability remain under pressure. Production rates at several of our units continue to be managed proactively in response to lower demand and to manage inventory levels while strict cost and capital management measures continue.
Despite these continued market headwinds, H1 FY24 total chemicals sales volumes were 4% higher than H1 FY23, largely due to higher ethylene and polyethylene sales in America, improved production and supply chain performance in Africa offset by continued lower demand in Eurasia. Sales volumes for Q2 FY24 were 2% lower than Q1 FY24 due to lower production in Africa and demand in Eurasia.
Pricing and demand volatility is expected to continue through H2 FY24. Global market sentiment and petrochemical markets remain uncertain with the persistent muted demand and margin outlook for Chemicals. Our South African suppliers and customers continue to face business disruptions due to challenges at Eskom and Transnet. Sasol continues to engage with the South African government to assist both Eskom and Transnet t address the associated energy and supply chain constraints. The previously communicated FY24 production and sales volume guidance remains intact for all segments, except ORYX GTL utilisation rate which is forecasted to be 65 - 75% due to the challenges experienced in Q2 FY24, which is further outlined in the Fuels segment.
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