Sasol to act on underperforming assets after $3-B writedown
Sasol will take "decisive action" following a review of its underperforming chemicals units, CEO Simon Baloyi said on Tuesday after the South African petrochemicals company announced a $3-B asset writedown due to depressed prices.
Sasol's shares were down 6.3% after it posted a 27.3 billion rand ($1.54 B) loss before interest and tax in the year to June 30, from profit of 21.5 billion rand the previous year.
"We're going to look at our global international chemicals portfolio," Baloyi told analysts. "We're going to go through asset by asset and we're going to take decisive actions on underperforming assets."
Sasol CFO Hanre Rossouw said the ongoing asset review was "not a disposal program as we previously had when we were in financial distress."
While some assets could be sold, others could be "repaired, optimized or closed," Rossouw said.
Sasol could also consider selling its 50% stake in the Lake Charles chemicals complex in Louisiana, U.S, "but at the right time," Baloyi said.
Sasol, which produces chemicals and liquid fuels from coal and gas, jointly owns the business with LyondellBasell.
"If you look at where we are right now in the cycle it won’t be attractive. We don’t think it will help us generate any value for shareholders," Baloyi said.
The chemicals segment contributed 35% to Sasol's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the financial year, down from 37% previously.
Sasol did not declare a final dividend, leaving the interim 2 rand per share declared at half-year as the full-year payout for the 2024 financial year.
The company has changed its dividend policy, which was previously based on 2.5–2.8 times core headline earnings per share, to 30% of free cash flow generated, provided that net debt is below $4 B on a sustained basis.
"The disconnect between headline earnings and cashflow generation, as well as elevated leverage levels, has necessitated a revision to the company's dividend policy," Sasol said in a statement.
Net debt for 2024 stood at $4.1 B, just above the dividend trigger level.
($1 = 17.7820 rand)
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