In a brief statement, Sasol has announced that its financial results for the year ended 30 June 2020 (2020 financial year) were impacted by the COVID-19 pandemic and a severe decline in crude oil and chemical product prices. The impact of the weak macro-economic environment was partly mitigated by a strong cash cost, working capital and capital expenditure performance.
Sasol’s adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) is expected to decline by between 17% and 37% from R47,6 billion in the prior year, to between R30,0 billion and R39,5 billion.
This results from a 18% decrease in the rand per barrel price of Brent crude oil coupled with much softer global chemical and refining margins impacting Sasol’s gross margins adversely, especially during the second half of the 2020 financial year.
The cash fixed cost performance for the second half of the year improved markedly, partly offsetting the impact of lower gross margins.
The largest contributor relates to impairments of a number of cash-generating units following the decline in the long-term macro-economic outlook, and the fair value impact following the commencement of partnering discussions for Sasol’s Base Chemicals assets in the United States. Aggregate pre-tax impairment charges of approximately R112 billion have been recognised in the 2020 financial year.
The impairments and fair value adjustments have impacted the reporting segments as follows:
– Energy R12,5 billion across the portfolio;
– Base Chemicals R71,3 billion, primarily in the United States; and
– Performance Chemicals R27,7 billion, primarily relating to its share of ethylene producing assets in the United States.
Other non-cash adjustments include:
– Unrealised losses of R7,4 billion on the translation of monetary assets and liabilities due to the 23% weakening of the closing rand/US dollar exchange rate; and
– Unrealised losses of R4,8 billion on the valuation of financial instruments and derivative contracts.
– Depreciation of R3,9bn attributable to those Lake Charles Chemicals Project (LCCP) units that reached beneficial operation.
The financial information on which this trading statement is based has not been reviewed and reported on by the Company’s external auditors.
Sasol will release its Annual Financial Results on Monday, 17 August 2020, for the year ended 30 June 2020. Given the prevalence of the COVID-19 pandemic, and the associated restrictions placed on public gatherings, Sasol has decided to pre-record its results presentation.
Sasol’s President and Chief Executive Officer, Fleetwood Grobler, and Chief Financial Officer, Paul
Victor, will present the results. The pre-recorded presentation will be available on 17 August 2020.