Sasol getting back to work via TheCitizen_News
While the world will feel the impact of the coronavirus for years to come and a lot of uncertainty remains in the global business world, Sasol’s update to shareholders seems to indicate that it may have turned the corner. The announcement also alluded to significant changes in the group’s structure.Firstly, the huge Lake Charles Chemical Project in the US is virtually complete, with management saying that all major production units have started beneficial production.
“Since the lockdown restrictions in SA were eased on 1 June, SSO has ramped up production and Natref is expected to start production by the end of June and will ramp up to full capacity as jet fuel demand resumes,” according to the operational update. The other chemical plants returned to production in May as well.
It makes sense that Sasol – and probably lot of companies around the world – would not have had any hope to meet such covenants when income just about disappeared for a few months.The condition that Sasol must prioritise debt reduction still stands, but new commitments were added to the effect that Sasol will not consider dividends as long as its leverage remains above 3 times net debt to Ebitda.
A surprise move is that Sasol aims to introduce more separation between its energy portfolio and the businesses that manufacture chemicals. Sasol has already introduced changes within its top management structure towards this new strategy and warned that it will impact on the greater workforce.Management warned of a low oil price environment for the past year, fears that were more than realised when the coronavirus pandemic hit and oil prices tumbled. Recent news of friction between oil-producing countries will keep the oil price lower for longer.
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