JOHANNESBURG, Nov. 23,
2017 /CNW/ - Sasol today unveiled its refined corporate strategy,
which sets a clear path for sustainable growth and accelerated
shareholder returns.
Joint President and Chief Executive Officer (CEO), Stephen Cornell says: "In developing our
strategy, we considered both the opportunities and risks we face,
informed by developments in the external environment. It is clear
that megatrends influential to our business will result in greater
demand for chemicals and energy products in key markets we
serve."
Key megatrends and assumptions informing Sasol's strategic
choices are global population growth and further urbanisation, the
move to even greater efficiency and performance, in all aspects of
business, supported by digitalisation and sustained volatility in
both oil prices and exchange rates.
"Against this backdrop, our value-based growth strategy is
premised on further enhancing our foundation businesses, leveraging
our core strengths in specialty chemicals, exploration and
production (E&P) and retail fuels, underpinned by increased
discipline in capital allocation," says Cornell.
Sasol's foundation businesses, which are already cash positive
at a US$40 per barrel oil price,
provide a robust platform for long-term growth and delivery of
ongoing value to shareholders.
Joint President and CEO, Bongani
Nqwababa says: "Our delivery track record - evidenced in
recent years by significant volume improvements at key facilities,
our competitive cost position and global portfolio of highly
cash-generative, diversified assets - places us in a strong
position to realise greater value from our foundation businesses.
Here, operational excellence, continuous improvement and
digitalisation programmes, as well as rigorous asset reviews, will
enable us to become a more resilient, efficient and effective
organisation."
To date, Sasol has completed reviews on more than half of its
global assets, underpinned by the company's drive to improve asset
performance, not liquidity requirements. Thus far, the reviews have
confirmed that the majority of the company's assets will be
retained and clear improvement actions have been defined for each.
The reviews conducted to date did, however, identify the
Canadian shale gas asset as being non-core. In this respect, Sasol
will commence a structured divestment process involving Progress
Energy, the partner in this asset.
With reference to the clear choices made to drive value-based
growth, in Sasol's Chemicals Business the company will
progressively grow its portfolio of high-value specialty chemicals
in attractive growth sectors.
"Our existing application know-how and strong product portfolio
in a broad range of specialty chemical products, gives us
confidence we can deliver in this area," says Cornell. "Our push
into specialty chemicals is further supported by the benefit of the
scale and cost advantage we enjoy through our investments in
commodity chemicals in South
Africa and North America.
We will take full advantage of these large, cost competitive
facilities to grow our specialty chemicals portfolio."
On the upstream front, the company will pursue progressive,
disciplined growth in E&P both in Mozambique and in selected countries in
West Africa, to expand production
levels with a bias to liquid plays.
"To win on the African continent, we will leverage our current
upstream expertise, while continuing to strengthen our E&P
capabilities given the larger role we envisage for Sasol
Exploration and Production International going forward," says
Nqwababa.
Regarding Sasol's Energy Business, Nqwababa adds: "To ensure we
drive more of our own liquid fuel production through Sasol's retail
network, where we enjoy higher margins, we will continue to
aggressively grow our liquid fuels retail footprint in Southern Africa. We will capitalise on our
strong brand and existing cost advantage to achieve our retail
fuels growth aspirations."
On Sasol's financial framework, Paul
Victor, Chief Financial Officer says: "We will apply
increased discipline in our capital allocation approach, focused on
delivering improved cash flow generation through the cycle,
adopting a balanced approach to shareholder returns and a capital
structure that is fit for the future."
Translating Sasol's strategy into measurable value for
shareholders will comprise two distinct phases.
"From now until 2022, Sasol will focus on delivery of the Lake
Charles Chemicals Project (LCCP) in the US and the Production
Sharing Agreement in Mozambique,
while extracting further value from our existing portfolio of
diversified assets. In this period we are targeting an improvement
in return on invested capital (ROIC) of at least 2% on our
financial year 2017 base. This will be achieved through continuous
improvement that will encompass various initiatives across our
value chain," says Victor.
He adds that successful delivery of these initiatives will drive
earnings growth and greater efficiency and effectiveness, which in
turn, support the earlier delivery of returns to shareholders
through an increase in Sasol's dividend payout to 40% or 2,5 times
cover by 2022.
"Beyond 2022, we will focus on building an investment portfolio
of smaller to medium-sized organic and inorganic opportunities, in
the range of US$500 million to US$1
billion. This will be directed towards our growth focus
areas in specialty chemicals, exploration and production and retail
fuels," says Victor.
"In the longer term, we will leverage our investment base with
flexibility for greater growth that we will drive through
partnerships. In the 2022 plus timeframe, we are confident that we
will be in a position to progressively increase the dividend payout
to 45% or 2,2 times cover."
Victor concludes: "Based on our scenarios and modelling, we
believe we can deliver at least 12% ROIC and 5% earnings before
interest and tax (EBIT) growth through the cycle, in the medium to
longer-term."
Sasol has also made several key decisions in areas where the
company does not believe it can maintain a leading position or
deliver strong returns.
In this regard, one of several important decisions is that Sasol
will not invest in further Greenfields gas-to-liquids (GTL)
projects. This decision means the company will no longer pursue its
proposed GTL project in the US. In January
2015 Sasol announced it was delaying a final investment
decision on the project to conserve cash in response to lower oil
prices.
"While our current GTL assets are generating good returns and
cash flows, the value proposition for Sasol to build new GTL
projects is uneconomic against a volatile external environment and
structural shift to a low oil price environment."
Cornell adds Sasol will maintain its industry-leading position
in Fischer-Tropsch (FT) technology.
"We will continue to work on opportunities to optimise and
improve our existing facilities in regard to catalyst performance,
product yields and energy efficiency. We also see further
opportunities to high-grade the value from our GTL molecules
through base oils extraction, and we will continue to license and
support our FT technology," says Cornell.
Sasol has also decided not to invest in any additional crude oil
refining capacity.
"This decision was informed by the large investments that will
be required to meet changing fuel specifications in South Africa and a lack of any clear
competitive advantage for Sasol outside our existing position in
Secunda," says Cornell.
"We have also made an important call on commodity chemicals,"
says Nqwababa. "While we have a solid foundation business in
commodity chemicals and the world-scale LCCP under construction in
the US, the risk profile to execute such projects alone, in the
future, is larger than what Sasol wishes to undertake. Such
investments in feedstock-advantaged locations may still be
considered, but we will not entertain wholly-owned investments in
similar mega-projects, such as the LCCP, going forward."
In line with enhancing its robust foundation, Sasol will
continue to invest in extracting further value from its chemicals
facilities in the US and South
Africa, while also pursuing commodity chemicals investments
where this can support the company's desire to grow its specialty
chemicals portfolio.
"Our strong foundation competitively positions the company for
ongoing value creation and future growth, underscored by a clear,
focused strategy that taps into our core strengths and exploits
potential in key growth markets," says Cornell.
"We will be executing our strategy in a phased, disciplined and
progressive manner. Our growth ambitions will, of course, take into
account our balance sheet, our earnings flow and ability to
successfully execute our plans to ensure we deliver superior
returns to our shareholders," concludes Nqwababa.
Note:
- Additional supporting information relating to Sasol's 2017
Capital Markets Day is available on the Investor Centre page of
Sasol's corporate website at http://www.sasol.com.
About Sasol:
Sasol is an international integrated chemicals and energy
company. Through our talented people, we use selected technologies
to safely and sustainably source, produce and market chemical and
energy products competitively to create superior value for our
customers, shareholders and other stakeholders.
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,
executing our growth projects, (including LCCP), oil and gas
reserves and cost reductions, including in connection with our
BPEP, RP and our business performance outlook. Words such as
"believe", "anticipate", "expect", "intend", "seek", "will",
"plan", "could", "may", "endeavour", "target", "forecast" 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 on Form 20-F filed on 28 August 2017 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.
Please note: A billion is defined as one thousand million. All
references to years refer to the financial year 30 June.
Any reference to a calendar year is prefaced by the word
"calendar".
Comprehensive additional information is available on our
website: http://www.sasol.com
SOURCE Sasol Limited