Sasol Limited reports developments tied to its global chemicals and energy operations, including integrated production in Southern Africa and its International Chemicals business. Recurring updates cover operating and financial results, production performance at Secunda Operations, coal quality, gas and condensate logistics, cost and capital spending discipline, and product supply across energy and chemical value chains.
Company news also includes capital-structure actions by Sasol Financing USA LLC, including cash tender offers and senior note activity, as well as shareholder voting matters, board changes, governance updates, safety performance, and business outlook disclosures.
Sasol is focusing on environmental sustainability by advancing its climate change strategy, targeting lower-carbon operations. The company is exploring various initiatives to significantly reduce greenhouse gas emissions, specifically through carbon dioxide (CO2) utilization technologies. An invitation is extended for interested parties to participate in a Request for Information (RFI) to collaborate on CO2 utilization technologies aimed at Sasol's operations in Secunda and Sasolburg, South Africa, with submissions due by September 30, 2020.
Sasol is advancing its climate change mitigation strategies through a Request for Information (RFI) process, inviting partners to develop CO2 utilization technologies at its South African operations. The initiative targets large-scale greenhouse gas (GHG) reductions and aims to foster collaboration in technology deployment. Interested parties can submit their proposals until September 30, 2020. This step embodies Sasol's commitment to sustainable operations and reducing environmental impact.
Sasol activated its inclement weather protocols ahead of Hurricane Laura, impacting its Lake Charles Chemicals Complex in Louisiana. The company prioritized employee safety and temporarily shut down facilities in Lake Charles, Greens Bayou, and Winnie, Texas. While the storm caused electrical outages, initial assessments reported no flooding or significant damage to process equipment. The Lake Charles site remains shut down, with operations resuming dependent on power restoration. Sasol holds Atlantic Named Wind Storm insurance for affected units and reports no anticipated impacts on potential divestment transactions related to its U.S. base chemical portfolio.
Sasol activated inclement weather protocols ahead of Hurricane Laura, which made landfall on August 27, 2020, affecting its facilities in Lake Charles, Louisiana. The company temporarily shut down operations due to widespread electrical outages and facility impacts. While damage assessments are ongoing, initial reports indicate no flooding or significant equipment damage. Sasol has insurance coverage for affected units and is in communication with customers regarding production impacts. No adverse effects on potential divestment transactions are anticipated.
Sasol reported a loss of R91.3 billion for the year, a stark contrast to earnings of R6.1 billion in the previous year. The decline was driven by low oil prices averaging US$62.62 per barrel, coupled with the adverse economic impact of COVID-19. Key metrics include an adjusted EBITDA drop of 27% and a basic loss per share of R147.45. Despite challenges, sales volumes in the Base Chemicals and Performance Chemicals segments improved by 19% and 8% respectively. The firm also improved cash fixed costs, achieving a historical low working capital ratio of 12.5%.
Sasol reported a significant financial downturn for the year ending June 30, 2020, posting a loss of R91.3 billion, primarily due to the collapse of oil prices and the impact of COVID-19. This compares to a profit of R6.1 billion in the prior year. The company faced a decline in gross margins, attributed to an 18% drop in Brent crude oil prices. Despite challenges, the Lake Charles Chemicals Project showed improved EBITDA performance, with total cash fixed costs remaining flat year-over-year. The company has suspended dividend payments to protect liquidity, as its debt levels surged to R189.7 billion.
Sasol announced a projected significant loss per share of R146.75 to R148.15 for the year ended June 30, 2020, compared to earnings of R6.97 in the previous year. Headline loss per share is expected between R8.72 and R14.86, with core HEPS declining to R11.02 to R18.56. Adjusted EBITDA is projected to fall by 17% to 37%, from R47.6 billion to R30.0 billion - R39.5 billion, due to a drop in crude oil prices and weak chemical margins. The company recognized R112 billion in pre-tax impairments, largely driven by a deteriorating macroeconomic outlook.
Sasol South Africa Limited has agreed to negotiate the sale of its sixteen air separation units to Air Liquide for approximately R8.5 billion. These units, capable of producing up to 42,000 tons of oxygen per day, are crucial for Sasol's operations in Secunda. This transaction aligns with Sasol's divestment strategy announced in March 2020 to mitigate lower oil prices and COVID-19 impacts. The deal is subject to approvals and expected to close in the financial year 2021. A trading statement update is anticipated in early August 2020.
Sasol announced its production and sales metrics for the year ended 30 June 2020, revealing a total of 774 COVID-19 infections among employees, with 561 active cases. Despite these infections, operations remain largely unaffected. The Lake Charles Chemicals Project (LCCP) is nearing completion at 99%, with a total capital expenditure of US$12.7 billion. The Low Density Polyethylene (LDPE) plant, damaged in a fire, is expected to come online by the end of October 2020. A detailed trading statement is expected on or before 31 July 2020.
Sasol has entered into an agreement to sell its indirect beneficial interest in the Escravos GTL plant in Nigeria to Chevron, officially effective from September 1, 2019. This transaction will relieve Sasol of associated guarantees and obligations while enabling continued support to Chevron through catalyst supply and technical assistance.
Additionally, Sasol has finalized a 51% stake sale in an explosives joint venture to Enaex, launching operations in South Africa on July 1, 2020. These moves are part of Sasol's divestment strategy to streamline its portfolio while further asset sales are underway in Mozambique and the USA.