Sasol ends torrid financial year with a R91 billion loss

0:00
play article
Subscribers can listen to this article
  • The petrochemical group says 'unprecedented low oil prices' and impairments of R111.6 billion resulted in a loss of R91.3 billion.
  • The group expects global oil prices to remain low for up to 18 months. 
  • The company's total debt has increased to R189.7 billion.


Sasol has ended a turbulent year with a loss of R91.3 billion.

The petrochemical group's year to end June was marked by a sharp fall in oil prices which significantly slashed its market capitalisation. Last week it warned of R112 billion in writedowns, which exceeded its market capitalisation.

The financial results paint a devastating picture of the impact of international oil price fluctuations and Covid-19 on the group's operations, in what is likely to add to the unease of investors. Sasol's shares fell 4% in early trade on Monday. 

"The combined effects of unprecedented low oil prices, destruction of demand for products and impairments of R111.6 billion resulted in a loss of R91.3 billion for the year compared to earnings of R6.1 billion in the prior year," the company said

"We expect that oil prices will remain low for the next 12 to 18 months as the impact of COVID-19 becomes better understood."

Headline earnings per share tanked by more than 100% to a -R11.79 loss per share, compared to R30.72 in the prior year.

The gross margins of the group's energy business, meanwhile, slumped by 38%.

To mitigate the impact of the losses on the balance sheet, the company said it had engaged its lenders to waive its loan covenants as at 30 June 2020 from 3 times to 4 times of net debt.  Sasol's first significant debt, due next year, was $1 billion in loans.

The company's total debt, largely denominated in US dollars, increased to R189.7 billion, from R130.9 billion in the previous year. 

It also stated that it had secured $1 billion syndicated loan facility for up to 18 months to enhance its US dollar liquidity position during the peak gearing phase as its Lake Charles Chemicals Project ramps up.

The financing of the Chemicals Project has contributed to earnings losses, with an additional R6 billion going into finance charges as the project started operating.

The Johannesburg headquartered company has embarked on a process of offloading assets, in a bid to stabilise its balance sheet, including a proposal to sell Secunda's air separation units to Air Liquide for R8.5 billion.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
15.16
(+0.11)
ZAR/GBP
20.59
(-0.05)
ZAR/EUR
18.30
(+0.01)
ZAR/AUD
11.68
(-0.61)
ZAR/JPY
0.15
(+0.02)
Gold
1828.12
(+0.05)
Silver
24.75
(+0.09)
Platinum
1070.99
(+0.29)
Brent Crude
54.89
(-2.34)
Palladium
2377.00
(+0.59)
All Share
63549.75
(-0.52)
Top 40
58446.35
(-0.49)
Financial 15
11916.89
(+0.01)
Industrial 25
83811.01
(+0.08)
Resource 10
63855.25
(-1.46)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 652 votes
No, I did not.
51% - 1616 votes
My landlord refused
28% - 875 votes
Vote