(Reuters) -South African petrochemical firm Sasol is working to contain the impact of higher tariffs on its chemical exports to the U.S., Chief Financial Officer Walt Bruns said on Monday, saying they could affect $80 million worth of sales.
A 30% tariff imposed by President Donald Trump on South Africa came into effect this month, threatening the viability of billions of exports from Africa’s most advanced economy into the U.S.
Sasol, which operates a chemicals business in the U.S., also exports about 10% of its South African chemicals production into the world’s biggest economy.
“We estimate the impact on our business to be around $80 million, of which we believe we can mitigate at least $20 to $30 million,” Bruns told Reuters in an interview.
“Some of our customers are willing to allow us to pass on the higher cost to them. If not, then we can re-allocate some of the product to Asia, so there’ll be a bit of a shift from a supply chain point of view,” he added.
Sasol CEO Simon Baloyi told analysts that the U.S tariffs were not a major threat to the company. “We produce what we sell in the U.S. mainly in the U.S.,” Baloyi said.
Earlier on Monday, Sasol posted basic earnings per share of 10.60 rand ($0.6070) for the year ended June 30 compared to a 69.94 rand loss per share the previous year, on the back of higher chemicals prices, tighter cost controls and lower asset writedowns.
Sasol also benefited from a 4.3 billion rand payout from Transnet, after it claimed in a legal suit the state-owned logistics firm had overcharged for oil transportation over several years.
The company also recorded significantly lower impairments of 20.7 billion rand, compared with 74.9 billion rand in the previous year.
The asset writedowns were related to its Secunda and Sasolburg liquid fuels refinery operations, Mozambique gas production sharing agreement and exploration project, and Italian chemicals business.
Sasol once again skipped dividend payments as its $3.7 billion net debt remained above the $3 billion debt cap in terms of its dividend policy.
($1 = 17.4620 rand)
(Reporting by Nelson Banya; Editing by Himani Sarkar, Subhranshu Sahu and Jan Harvey)
