Sasol sees loss with R112 billion in writedowns, oil slump

Sasol Ltd said it will swing to a full-year loss per share after writedowns on US chemical assets contributed to R112 billion ($6.3 billion) of charges and oil prices declined.

The South African fuel and chemical maker’s results for the year ended June 30 were “impacted by the Covid-19 pandemic and a severe decline in crude oil and chemical product prices,” Sasol said in a trading statement.

Lower demand for fuel due to the coronavirus pandemic, along with a battering for oil prices, weighed on a company already reeling from mismanagement and cost overruns at the Lake Charles Chemicals Project in Louisiana.

Sasol has accelerated an asset disposal program aimed at reducing debt and avoiding a last-resort rights offer.

Sasol shares rose 2.6% as of 10:04 a.m. in Johannesburg as crude oil futures in New York climbed for a second day on signs that the spread of the pandemic is decelerating in the US The gains trimmed Sasol’s retreat in 2020 to 48%, still on course for the worst year since 1998.

Sasol’s base chemicals business will take an impairment of R71.3 billion, with an additional R27.7 billion charge for performance chemicals, mainly in the US Its energy operations will write down R12.5 billion across the portfolio.

The rand price of Brent crude oil declined by 18% for the financial year and was coupled with softer global chemical and refining margins, Johannesburg-based Sasol said Tuesday.

The company expects a loss per share of between R146.75 and R148.75, compared with earnings per share of R6.97 for the previous financial year.

Sasol’s annual results will be released Aug. 17.

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Sasol sees loss with R112 billion in writedowns, oil slump