Update on Sasol's Response to Covid-19
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes: JSE: SOL NYSE: SSL
Sasol Ordinary ISIN codes: ZAE000006896 US8038663006
Sasol BEE Ordinary Share code: JSE: SOLBE1
Sasol BEE Ordinary ISIN code: ZAE000151817
(“Sasol” or “Company”)
UPDATE ON SASOL’S RESPONSE TO COVID-19
BACKGROUND
Shareholders are referred to Sasol’s SENS announcement issued on 31 March
2020. In that announcement, Sasol stated it would continue to run its operations,
in line with regulatory requirements applicable in the jurisdictions we operate in, to
ensure uninterrupted supply of essential products such as fuels and chemicals in
these jurisdictions. We reiterate that the COVID-19 pandemic is highly dynamic,
and we will continue to update the market of any further impact on Sasol’s
business.
A small number of Sasol employees have tested positive for COVID-19 and are
receiving our full support. These were isolated cases and have not negatively
impacted operations.
Sasol communicated a comprehensive response strategy on 17 March 2020 and
substantial progress has been made with regards to its US$2billion cash
conservation programme. While the Company has made substantial progress, it
will also implement additional self-help management actions to mitigate further
negative impacts of COVID-19 across its portfolio.
UPDATE ON OPERATIONS
In South Africa, the national COVID-19 lockdown has resulted in an
unprecedented decline in fuel demand since coming into effect on Friday, 27
March 2020. Sasol and its partner in Natref, Total South Africa, decided to
suspend the production at Natref with effect from Thursday, 9 April 2020 until
further notice.
Given the steep decline in fuels demand, a decision was also made by Sasol to
reduce daily production rates at our Secunda Synfuels Operations (SSO) by
approximately 25% to meet the current market demand, while maintaining optimal
inventory levels. We will maintain these production rates until further notice, while
carefully monitoring the supply and demand balance. A further reduction in
production rates may be required depending on further developments in the fuels
market. All Sasol’s mines are continuing to operate notwithstanding the lower
internal demand, resulting in the external coal purchases being significantly
minimised, compared to what was previously planned for the remainder of this
financial year.
Chemicals production will continue to be prioritised within the revised SSO
operating parameters including this cutback scenario. Despite the suspension of
production at the Natref refinery and lower production rates at SSO, the country’s
current demand for fuels and chemicals, including sanitisers, will be met. The
Company will continue to monitor the chemicals demand as well as supply chain
risks and will keep the market updated on developments.
Given these developments and the decline in demand, liquid fuels sales volumes
are expected to be approximately 50 – 51 million barrels against the previously
guided 57 – 58 million barrels for financial year 2020. Accordingly, Synfuels
production volumes will be approximately 7,3 – 7,4 million tons against the
previously guided range of 7,7 – 7,8 million tons. At this stage a similar reduction
in Synfuels chemicals demand is not being experienced, and Sasol is prioritising
supply of chemicals within South Africa as well as strong export demand.
More detail on production volumes and updated guidance will be provided in the
Company’s Q3 FY20 Business Performance Metrics report, to be released in April
2020.
RESPONSE STRATEGY PROGRESS
As referenced earlier, the Company has made significant progress on the US$2
billion business self-help measures for financial years 2020 and 2021, which form
the basis of the response strategy to the COVID-19 pandemic and oil price
volatility.
Given the continued negative impact of COVID-19 on market demand and global
macro-economic indicators, Sasol’s management team is in the process of
proactively identifying further measures to provide an additional buffer against
short term volatility.
Sasol has put in place governance structures to manage the situation
appropriately and will take decisive action where necessary to respond to any
further changes in markets. These additional measures will be communicated to
the market once agreed with the various stakeholders.
Safeguarding the health and well-being of employees and providing essential
products to customers and stakeholders remains the Company’s priority.
8 April 2020
Johannesburg
Sponsor: Merrill Lynch South Africa Proprietary Limited
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.
Date: 08-04-2020 08:00:00
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