(5 minutes read)
· Sasol reported a loss for the financial year after $6.5
billion in asset write downs, and said its Lake Charles chemicals project has been further delayed
· The South African fuel and chemical maker –Sasol- lost R91 billion for the year ended June 30 due to depressed demand and prices for its products due to the coronavirus pandemic on the one hand and added woes to its problems at the US project
· The Lake Charles project, approved in 2014 at an estimated cost of US$8.1 billion, exceeded its “worst-case scenario” for price over the last few years
Sasol reported a loss for the financial year after $6.5 billion in asset write downs, and said its Lake Charles chemicals project has been further delayed.
The South African fuel and chemical maker –Sasol- lost R91 billion for the year ended June 30 due to depressed demand and prices for its products due to the coronavirus pandemic on the one hand and added woes to its problems at the US project.
The company flagged the combined effects of unprecedented low oil prices, destruction of demand for products” and write downs resulted in the loss. Despite the huge challenges, the company said that its foundation businesses are still intact.
After a string of disappointments around the construction of Lake Charles, the company is trying to focus on its core strengths. It has made progress with lenders to relax covenants, resulting in “no significant debt maturities before June 2021,” when a US $1 billion syndicated loan comes due. Sasol will not declare a dividend for as long as its net debt is more than three times greater than its earnings before interest, taxes, depreciation and amortization. The ratio is currently 4.3. Sasol will pursue a US$2 billion rights issue, saying it would take place in the second half of the financial year 2021.
The Lake Charles project, approved in 2014 at an estimated cost of US$8.1 billion, exceeded its “worst-case scenario” for price over the last few years. The last remaining unit to come online will be the low density polyethylene facility, which was damaged during a fire in January. That is now expected to reach full operation in October. The problems at Lake Charles contributed to a plunge in Sasol’s market cap of US$13 billion in the first three months of 2020.
