SOUTH AFRICA – Petrochemical giant Sasol has reiterated its decision not to pursue a rights issue, as the group made headway in reducing its debt burden by US$4,26 billion for its half-year to the end of December 2020.
Sasol published its latest results on the Johannesburg Stock Exchange, which showed that the group’s total debt at the end of its interim period stood at US$8.49 billion, compared to US$12.8 billion as at June 30, 2020 for the full-year.
This is a notable cut within just six months, which comes largely on the back of the 50% sale of its Lake Charles Chemicals Project (LCCP) in the US.
“During the period [interim to December 31, 2020], we utilised proceeds from our asset divestments to repay the US dollar syndicated loan, as well as a portion of our revolving credit facility, reducing our US dollar denominated debt by almost US$2 billion to US$8.2 billion,” Sasol pointed out in its Sens results statement.
‘’We utilised proceeds from our asset divestments to repay the US dollar syndicated loan, as well as a portion of our revolving credit facility, reducing our US dollar denominated debt by almost US$2 billion to US$8.2 billion”
“Through our comprehensive response plan and planned asset divestments, we intend to further reduce our net debt to achieve a net debt earnings before interest, taxes, depreciation, and amortisation (EBITBA)ratio of less than 2.0 times and gearing of 30% by 2023,” it added.
Sasol’s share price was up more than 4% in Monday morning trade at US$14.2 on the backdrop of that news coming despite the group not declaring an interim dividend, highlighting the stock being buoyed by the slashing of its debt.
The group said that it had “delivered a good set of results” for the six months ended December 31, 2020, with earnings increasing by more than 100% to US$1.03 billion from US$302.5 million in the prior period.
“Despite a 23% decrease in the rand/barrel oil price, our adjusted Ebitda decreased by only 6%. This achievement is as a result of a strong cash cost, working capital and capital expenditure performance in response to the challenging environment,” the statement said.
Sasol noted that its earnings were positively impacted by the following non-cash adjustments by gains of US$309.2 million on the translation of monetary assets and liabilities due to a 15% strengthening of the closing rand/US dollar exchange rate compared to June 2020.
Another attributes was the gains of US$336 million on the valuation of financial instruments and derivative contracts; and US$201.7 million gain on the realisation of the foreign currency translation reserve, mainly on the divestment of 50% interest in the US LCCP Base Chemicals business.
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