South Africa's Sasol to cut annual capex in turnaround strategy
(Adds detail, background)
JOHANNESBURG, Dec 2 (Reuters) - South Africa's Sasol
aims to cut annual capital expenditure by 30% and
reduce costs over the next 3 to 4 years as part of its
turnaround strategy, the petrochemicals giant said on Wednesday.
Sasol, which has been restructuring its operations to cut
down debt, said it aimed to be more competitive, increase cash
generation and remain resilient at $45 per barrel oil price.
Sasol, the world's top manufacturer of motor fuel from coal,
has been battling high debt amid lower oil and chemicals prices
and the impact of COVID-19.
"We need to transform the business so that it is highly cash
generative, with a diversified asset base that yields
competitive returns to our shareholders through commodity cycles
and market volatility," Chief Financial Officer Paul Victor
Sasol said it planned to reduce annual capital expenditure
to between 20 billion to 25 billion rand, cut fixed costs by as
much as 20% and boost gross margins by up to 10%.
Investors have been concerned by the company's rising debt,
which stood at 189.7 billion rand for the year to June 30, after
cost overruns and delays in construction at its Lake Charles
Chemical Project (LCCP).
To tide over a debt crisis and repair its balance sheet,
Sasol embarked on a three-pronged strategy this year which
included disposal of assets, cash conservation efforts and a
potential rights issue of up to $2 billion.
As part of the process Sasol agreed to sell 50% of its
Louisiana based chemicals business at Lake Charles for $2
billion and form a joint venture with chemical company
The company said it expects $3.5 billion of asset
divestments by the end of its 2020 financial year.
(Reporting by Tanisha Heiberg; editing by Mfuneko Toyana and
First Published: 2020-12-02 14:59:29
Updated 2020-12-02 16:12:28
© 2021 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.