Sasol CFO Bongani Nqwababa
Photo by: Duane Daws
Worsening market volatility and uncertainty have prompted Sasol to raise its cash conservation target to an even higher outside range of R75-billion from a previous R50-billion.
The intensified response plan in response to the low oil price ensured balance sheet and earnings resilience at an oil price of $30/bl, outgoing Sasol CEO David Constable said in presenting half-year financial results for the six months to December 31.
Constable, who will hand the reins of the company on to joint CEOs Bongani Nqwababa and Stephen Cornell on July 1, reported that the integrated chemicals and energy company had extended both the target range and the duration through 2018.
“Our management interventions related to both cost and cash flow have been consistently ahead of the curve,” Constable said at the presentation attended by Creamer Media’s Engineering News Online. (Also watch attached Creamer Media video).
Through decisive cost savings and cash conservation actions the Sasol share price – which rose 0.92% on Monday to R482.70 a share – continued to hold up well, Constable remarked.
The restructuring charges for the company’s business performance enhancement programme to date had so far amounted to R3.4-billion against delivered actual latest half-year cost savings alone of R3.1-billion.
While the response plan protected cash over a relatively short period, several initiatives the company was carrying out would also result in longer-term cost savings.
The number of employees had been reduced by 3 100 through voluntary separation, voluntary early retirement and natural attrition at the top, senior and middle management layers of the company – a full-time sustainable headcount reduction of 9.2%.
In addition, excluding project work, the number of service provider personnel was reduced by 13 000 – a 23% reduction over the same period.
Structural refinements and the freezing of noncritical vacancies had lowered the employee complement by a further 5.3%, or 1 800 positions.
CFO and joint CEO designate Nqwababa said the company had again delivered another strong operational performance in the six months to December 31, and was well positioned to deliver sustainable shareholder value through focus on volume, margin expansion and strategy-driven capital allocation.