South Africa’s Sasol’s earning to decline by 20% amidst Covid and oil shock

(3 minutes read)

·        Sasol, South Africa’s   international integrated chemicals
and energy company  expects its full year earnings to decline by 20%
amid a volatile oil price and the impact of Covid-19.

·        The petrochemicals giant’s shares dived as much as 6% in the
recent trading: given its not so rosy bottom line, there is a
possibility of a rights issue of up to US$2 billion, which will be
clear only after the petrochemical company releases its annual
financial statements on August 17.

Sasol, South Africa’s  international integrated chemicals and energy
company  expects its full year earnings to decline by 20% amid a
volatile oil price and the impact of Covid-19.  The petrochemicals
giant’s shares dived as much as 6% in recent trading. Given its not so
rosy bottom line, there is a possibility of a rights issue of up to
US$2 billion, which will be clear only after the petrochemical company
releases its annual financial statements on August 17.

In recent times, \ the company  has battled several operational crises
including the effects of the pandemic on markets where it operates. To
address the unfavorable marled situation, Sasol has drawn up a cash
conservation strategy which included  the disposal of assets and a
potential rights issue of up to US$2 billion.

The firm has a  debt burden of R121 billion.  According to market
experts,  the slide in earnings shows the extent of the Covid-19
pandemic and the impact of the “dramatic downturn in the oil market”
on the company. The firm is trying to make good  by selling  assets to
realize more cash flows. It is not clear which assets will come under
the hammer. Some people say that the company will try to hive off the
non core sectors. The Johannesburg-headquartered firm’ asset base is
pegged  at approximately US$2.5 billion. One of the country’s largest
investors in capital projects, skills development and technological
research and development.  The company is listed on the JSE in South
Africa and on the New York Stock Exchange in the United States.