JOHANNESBURG, March 31, 2020 /PRNewswire/ -- Sasol welcomes and
fully supports the directives announced by South African President
Cyril Ramaphosa on 23 March 2020, to combat the spread of COVID-19
in South Africa, including a
three-week country-wide lockdown ("the COVID-19 directives"), which
effectively commenced on Friday, 27 March
2020 and will continue until Friday, 17 April 2020.
In South Africa, Sasol's
products and services, by and large, are classified as essential
goods and services as per Annexure B of the Lockdown Regulations
issued by the Minister of Cooperative Governance and Traditional
Affairs on 25 March 2020. Sasol plans
to run its South African-based operations for the duration of the
lockdown, and will work with the Government to ensure business
continuity and uninterrupted supply of fuels and chemicals in
South Africa during this period.
However, some plants will be required to reduce throughput, or
potentially shutdown following lower product offtake by our
customers due to the lockdown. Furthermore, some intermediate
chemicals will be re-directed to the production of products where
demand is not impacted, to the extent possible. To this end,
Sasol has formulated a special blend of alcohols to address the
increasing demand for sanitizer alcohols, and will expedite the
production and availability of these critical products locally to
help safeguard the health and wellbeing of South Africans.
Sasol is collaborating with the South African Department of
Trade, Industry and Competition (DTIC) and is also prioritising
supply to Government entities and other essential services to
jointly combat the spread of the virus in South Africa.
The health and wellbeing of employees remains Sasol's foremost
priority and appropriate measures have already been taken to
mitigate the risk of COVID-19 infection across all of Sasol's
sites. These measures are being strictly enforced and closely
monitored to ensure the ongoing safety of employees and the
public.
Outside of South Africa, most
of Sasol's operations are continuing, with no significant impacts
to North American Operations (NAO) or its supply chain, or to the
Lake Charles Chemicals Project (LCCP) construction to date.
Chemical manufacturing is defined as a critical infrastructure
sector, and therefore NAO and the LCCP is exempt from the
stay-at-home order issued by the Louisiana government.
All European and Asian assets are currently in operation. The
Central Processing Facility (CPF) in Temane, Mozambique, which supplies natural gas to
Mozambique and South Africa is not affected. Sasol continues
to work closely with suppliers and customers to ensure
uninterrupted supply, where possible.
The COVID-19 situation is highly dynamic and with infection
rates continuing to increase in many countries, there is a risk of
interruptions to production, construction and associated supply
chains, along with a potential impact on demand and product pricing
in some sectors. Shareholders are therefore advised that this could
impact Sasol's earnings for 2020 financial year (FY20). The impact
on the business, suppliers and customers is being continuously
evaluated and an update will be provided in the Q3 FY20 Business
Performance Metrics report.
UPDATE ON CREDIT RATING AND OIL HEDGING
Sasol notes that the credit rating agencies, S&P Global
Ratings (S&P) and Moody's have updated their credit rating
assessments of Sasol in light of the impact of the COVID-19
pandemic on global growth and the volatility in the oil price.
S&P has announced that it has revised Sasol's BBB- rating,
which was affirmed on 7 March to BB, with a negative outlook, while
Moody's also announced that it has revised Sasol's Ba1 rating to
Ba2 and placed the company under review for a downgrade. Moody's
stated that "South Africa's 21-day
lockdown to contain the outbreak creates further uncertainty on
near-term financial performance, while an extended lockdown beyond
the original timeline could further affect performance". The
cost of some of Sasol's floating rate debt is partly linked to our
credit rating and the revised rating profile will therefore result
in an increase in finance costs from existing facilities of
approximately US$10 million per
annum.
As stated in the market update on 17
March 2020, Sasol has developed a comprehensive response
strategy, which is being executed to mitigate the impact of
COVID-19 and a lower oil price as far as practically possible. This
includes a cash conservation programme, an accelerated and expanded
asset disposal and partnering programme, as well as a potential
rights issue of up to US$2 billion,
which remains subject to the progress of other initiatives. Sasol
maintains a long-term commitment to achieving an investment grade
credit rating.
Further to this, progress has been made on Sasol's hedging
programme reducing Sasol's exposure to any further short term
pricing downside. Oil hedges are in place for approximately 80% of
Synfuels fuels Q4 FY20 production, at approximately US$32 per barrel. Crude oil hedging execution
will continue for the next 12 months, while US$/ZAR and ethane
hedging programmes have been executed for the next twelve month
period.
Sasol continues to have liquidity of approximately US$2,5 billion to provide an additional buffer
against short term volatility.
Fleetwood Grobler commented "This
is an unprecedented time in the history of Sasol and the world. We
will continue to take decisive action to help safeguard the health
and well-being of our employees and provide essential products to
the many stakeholders that rely on us, while we reposition the
business to enhance its long term future."
Shareholders are advised to continue to exercise caution when
dealing in the Company's securities until a further announcement is
made.
Disclaimer - 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, expectations, developments and business
strategies. Examples of such forward-looking statements include,
but are not limited to, statements regarding exchange rate
fluctuations, expectations regarding future cash flow, Sasol's
ability to meet its debt covenants, Sasol's ability to achieve the
cost savings or complete its asset disposal programme, the actions
referred to herein intended to strengthen Sasol's balance sheet and
to maintain profitability at lower oil prices and 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. You are accordingly advised to exercise caution when
trading in the Company's securities until such time the full
details of the disposal and the rights offer are published. These
factors and others are discussed more fully in our most recent
annual report on Form 20-F filed on 28
October 2019 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.
For further information, please contact:
Sasol Investor Relations, please contact:
Feroza Syed
Chief Investor Relations Officer
Direct telephone: +27 (0) 10-344-7778
investor.relations@sasol.com
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SOURCE Sasol Limited