Sasol (JSE:SOL, NYSE:SSL) announces that it is formulating a comprehensive plan to conserve cash in response to lower international oil prices.
While the detailed actions underpinning Sasol’s response plan are being refined, certain decisive measures have already been agreed to and are being implemented. These include identifying opportunities for additional cash savings targeted over the next 30 months. The focus areas are capital portfolio phasing and reductions, capital restructuring, working capital improvements, margin enhancement and further fixed cost reductions. Cash flow improvements actioned in terms of the response plan will be over and above the current target of at least R4 billion in sustainable cost savings by 2016, which was confirmed last year as part of Sasol’s business performance enhancement programme.
As a result of the ongoing capital investment reprioritisation exercise, Sasol has decided to delay the final investment decision on its large-scale, gas-to-liquids (GTL) plant in Louisiana. The timing of the decision will take into consideration progress made with the execution of the Company’s world-scale ethane cracker and derivatives complex, prevailing market conditions and other strategic investment opportunities.
“Albeit at a much slower pace, we will continue to progress the U.S. GTL facility. This will allow us to evaluate the possibility of phasing in the project in the most pragmatic and effective manner. North America and our home base in Southern Africa remain strategic investment destinations for Sasol,” said David Constable, President and Chief Executive Officer.
Sasol is proceeding with the construction of the ethane cracker and derivatives complex in Louisiana. Given the robust project economics, the Sasol team is confident that this facility is the first step in developing the site near Lake Charles into an integrated multi-asset, multi-business hub, which will enable future growth for several decades to come.
In parallel, Sasol will also continue to advance its investments in Southern Africa, including the mine replacement programme and various gas and chemicals projects.
As the Sasol team finalises the details of its response plan, an update on the actions being undertaken will be provided when results are announced for the first half of the 2015 financial year on 9 March 2015.
Forward-looking statements: Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return and cost reductions. Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour” and “project” and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors are discussed more fully in our most recent annual report under the Securities Exchange Act of 1934 on Form 20-F filed on 9 October 2013 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.