Sasol sees loss with US$6.3bil in writedowns

Lower demand: A Sasol fuel station in Pretoria, South Africa. The company’s results were impacted by the Covid-19 pandemic. — Bloomberg

JOHANNESBURG: Sasol Ltd says it will swing to a full-year loss per share after writedowns on US chemical assets contributed to 112 billion rand (US$6.3bil) of charges and oil prices declined.

The South African fuel and chemical maker’s results for the year ended June 30 were “impacted by the Covid-19 pandemic and a severe decline in crude oil and chemical product prices, ” Sasol said in a trading statement.

Lower demand for fuel due to the coronavirus pandemic, along with a battering for oil prices, weighed on a company already reeling from mismanagement and cost overruns at the Lake Charles Chemicals Project in Louisiana.

Sasol has accelerated an asset disposal programme aimed at reducing debt and avoiding a last-resort rights offer.

Sasol shares rose 2.6% in Johannesburg as crude oil futures in New York climbed for a second day on signs that the spread of the pandemic is decelerating in the United States. The gains trimmed Sasol’s retreat in 2020 to 48%, still on course for the worst year since 1998.

Sasol’s base chemicals business will take an impairment of 71.3 billion rand, with an additional 27.7 billion rand charge for performance chemicals, mainly in the United States.

Its energy operations will write down 12.5 billion rand across the portfolio.

The rand price of Brent crude oil declined by 18% for the financial year and was coupled with softer global chemical and refining margins, Johannesburg-based Sasol said yesterday.

The company expects a loss per share of between 146.75 rand and 148.75 rand, compared with earnings per share of 6.97 rand for the previous financial year.

Sasol’s annual results will be released Aug 17. — Bloomberg

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