Sasol sees 61% decline in full-year earnings on write-downs, lower oil price

Petrochemicals group Sasol has recently reported a significant annual loss, largely driven by a R111.6 billion write-down and a drop in oil and chemical prices. Fleetwood Grobler, the CEO of Sasol, recently joined a CNBC Africa interview to address these financial challenges and discuss the strategies the company is implementing to overcome them. During the interview, Grobler outlined several key steps that Sasol is taking to restructure the company and improve its financial position. One of the primary issues highlighted was the high level of debt relative to income. Grobler acknowledged this concern and provided insights into the company's plans to address it. Sasol has embarked on a program aimed at achieving $1 billion in cost savings, and Grobler noted that they have not only met but exceeded this target in the past financial year. There are further cost-saving measures of $1 billion planned for the current financial year, with progress tracking positively. In addition to cost savings, Sasol is looking to divest certain assets to generate revenue and reduce debt. Grobler announced that the company has already achieved around $600 million in divestments and that more divestments are in progress. Once concluded, these divestments will provide additional funds to support the company's debt repayment efforts. Sasol is also considering a share rights issue in the new calendar year to further bolster its financial position. Grobler mentioned that the success of the company's self-help measures and the proceeds from divestments will influence the decision on the rights issue. The ultimate goal is to ensure Sasol's sustainability and profitability in a challenging economic environment. As part of its debt reduction strategy, Sasol is exploring the possibility of selling a stake in the Lake Charles Chemicals project. However, Grobler clarified that the partnering discussions pertain only to specific production units within the project, not the entire endeavor. He emphasized that Sasol's focus remains on performance chemicals and specialty units, while the partnering initiative targets the base chemical assets. This strategic realignment aligns with Sasol's 2017 announcement to concentrate on performance chemicals and refrain from further large-scale chemical projects. Grobler refrained from disclosing specific monetary details regarding the potential stake sale, citing the ongoing commercial discussions' sensitivity. Looking ahead, Grobler addressed the macroeconomic challenges that Sasol faces, particularly the volatility of oil prices. He emphasized the company's need to adapt to a world where oil prices stabilize around $45. To achieve this, Sasol is prioritizing balance sheet strength, dividend resumption, and disciplined capital allocation. Grobler highlighted the company's commitment to restoring shareholder value and positioning Sasol for sustainable growth in the future. Despite the significant hurdles ahead, Grobler expressed confidence in Sasol's ability to navigate the current economic uncertainties and emerge as a resilient and value-driven enterprise. Through strategic restructuring and decisive financial measures, Sasol is working towards a brighter future under the leadership of Fleetwood Grobler.