Sasol Unveils Strategy to Drive Future Value-based Growth

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JOHANNESBURG, Nov. 23, 2017 /PRNewswire=KYODO JBN/ --

Sasol today unveiled its refined corporate strategy, which sets a clear path

for sustainable growth and accelerated shareholder returns.

Joint President and Chief Executive Officer (CEO), Stephen Cornell says: "In

developing our strategy, we considered both the opportunities and risks we

face, informed by developments in the external environment. It is clear that

megatrends influential to our business will result in greater demand for

chemicals and energy products in key markets we serve."

Key megatrends and assumptions informing Sasol's strategic choices are global

population growth and further urbanisation, the move to even greater efficiency

and performance, in all aspects of business, supported by digitalisation and

sustained volatility in both oil prices and exchange rates.

"Against this backdrop, our value-based growth strategy is premised on further

enhancing our foundation businesses, leveraging our core strengths in specialty

chemicals, exploration and production (E&P) and retail fuels, underpinned by

increased discipline in capital allocation," says Cornell.

Sasol's foundation businesses, which are already cash positive at a US$40 per

barrel oil price, provide a robust platform for long-term growth and delivery

of ongoing value to shareholders.

Joint President and CEO, Bongani Nqwababa says: "Our delivery track record -

evidenced in recent years by significant volume improvements at key facilities,

our competitive cost position and global portfolio of highly cash-generative,

diversified assets - places us in a strong position to realise greater value

from our foundation businesses. Here, operational excellence, continuous

improvement and digitalisation programmes, as well as rigorous asset reviews,

will enable us to become a more resilient, efficient and effective

organisation."

To date, Sasol has completed reviews on more than half of its global assets,

underpinned by the company's drive to improve asset performance, not liquidity

requirements. Thus far, the reviews have confirmed that the majority of the

company's assets will be retained and clear improvement actions have been

defined for each.  

The reviews conducted to date did, however, identify the Canadian shale gas

asset as being non-core. In this respect, Sasol will commence a structured

divestment process involving Progress Energy, the partner in this asset.

With reference to the clear choices made to drive value-based growth, in

Sasol's Chemicals Business the company will progressively grow its portfolio of

high-value specialty chemicals in attractive growth sectors.  

"Our existing application know-how and strong product portfolio in a broad

range of specialty chemical products, gives us confidence we can deliver in

this area," says Cornell. "Our push into specialty chemicals is further

supported by the benefit of the scale and cost advantage we enjoy through our

investments in commodity chemicals in South Africa and North America. We will

take full advantage of these large, cost competitive facilities to grow our

specialty chemicals portfolio."

On the upstream front, the company will pursue progressive, disciplined growth

in E&P both in Mozambique and in selected countries in West Africa, to expand

production levels with a bias to liquid plays.

"To win on the African continent, we will leverage our current upstream

expertise, while continuing to strengthen our E&P capabilities given the larger

role we envisage for Sasol Exploration and Production International going

forward," says Nqwababa.

Regarding Sasol's Energy Business, Nqwababa adds: "To ensure we drive more of

our own liquid fuel production through Sasol's retail network, where we enjoy

higher margins, we will continue to aggressively grow our liquid fuels retail

footprint in Southern Africa. We will capitalise on our strong brand and

existing cost advantage to achieve our retail fuels growth aspirations."

On Sasol's financial framework, Paul Victor, Chief Financial Officer says: "We

will apply increased discipline in our capital allocation approach, focused on

delivering improved cash flow generation through the cycle, adopting a balanced

approach to shareholder returns and a capital structure that is fit for the

future."

Translating Sasol's strategy into measurable value for shareholders will

comprise two distinct phases.

"From now until 2022, Sasol will focus on delivery of the Lake Charles

Chemicals Project (LCCP) in the US and the Production Sharing Agreement in

Mozambique, while extracting further value from our existing portfolio of

diversified assets. In this period we are targeting an improvement in return on

invested capital (ROIC) of at least 2% on our financial year 2017 base. This

will be achieved through continuous improvement that will encompass various

initiatives across our value chain," says Victor.

He adds that successful delivery of these initiatives will drive earnings

growth and greater efficiency and effectiveness, which in turn, support the

earlier delivery of returns to shareholders through an increase in Sasol's

dividend payout to 40% or 2,5 times cover by 2022.

"Beyond 2022, we will focus on building an investment portfolio of smaller to

medium-sized organic and inorganic opportunities, in the range of US$500

million to US$1 billion. This will be directed towards our growth focus areas

in specialty chemicals, exploration and production and retail fuels," says

Victor.

"In the longer term, we will leverage our investment base with flexibility for

greater growth that we will drive through partnerships. In the 2022 plus

timeframe, we are confident that we will be in a position to progressively

increase the dividend payout to 45% or 2,2 times cover."

Victor concludes: "Based on our scenarios and modelling, we believe we can

deliver at least 12% ROIC and 5% earnings before interest and tax (EBIT) growth

through the cycle, in the medium to longer-term."

Sasol has also made several key decisions in areas where the company does not

believe it can maintain a leading position or deliver strong returns.

In this regard, one of several important decisions is that Sasol will not

invest in further Greenfields gas-to-liquids (GTL) projects. This decision

means the company will no longer pursue its proposed GTL project in the US. In

January 2015 Sasol announced it was delaying a final investment decision on the

project to conserve cash in response to lower oil prices.

"While our current GTL assets are generating good returns and cash flows, the

value proposition for Sasol to build new GTL projects is uneconomic against a

volatile external environment and structural shift to a low oil price

environment."

Cornell adds Sasol will maintain its industry-leading position in

Fischer-Tropsch (FT) technology.

"We will continue to work on opportunities to optimise and improve our existing

facilities in regard to catalyst performance, product yields and energy

efficiency. We also see further opportunities to high-grade the value from our

GTL molecules through base oils extraction, and we will continue to license and

support our FT technology," says Cornell.

Sasol has also decided not to invest in any additional crude oil refining

capacity.  

"This decision was informed by the large investments that will be required to

meet changing fuel specifications in South Africa and a lack of any clear

competitive advantage for Sasol outside our existing position in Secunda," says

Cornell.

"We have also made an important call on commodity chemicals," says Nqwababa.

"While we have a solid foundation business in commodity chemicals and the

world-scale LCCP under construction in the US, the risk profile to execute such

projects alone, in the future, is larger than what Sasol wishes to undertake.

Such investments in feedstock-advantaged locations may still be considered, but

we will not entertain wholly-owned investments in similar mega-projects, such

as the LCCP, going forward."  

In line with enhancing its robust foundation, Sasol will continue to invest in

extracting further value from its chemicals facilities in the US and South

Africa, while also pursuing commodity chemicals investments where this can

support the company's desire to grow its specialty chemicals portfolio.

"Our strong foundation competitively positions the company for ongoing value

creation and future growth, underscored by a clear, focused strategy that taps

into our core strengths and exploits potential in key growth markets," says

Cornell.

"We will be executing our strategy in a phased, disciplined and progressive

manner. Our growth ambitions will, of course, take into account our balance

sheet, our earnings flow and ability to successfully execute our plans to

ensure we deliver superior returns to our shareholders," concludes Nqwababa.

Note:

• Additional supporting information relating to Sasol's 2017 Capital Markets

Day is available on the Investor Centre page of Sasol's corporate website at

http://www.sasol.com.

About Sasol:

Sasol is an international integrated chemicals and energy company. Through our

talented people, we use selected technologies to safely and sustainably source,

produce and market chemical and energy products competitively to create

superior value for our customers, shareholders and other stakeholders.

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, developments and business

strategies. Examples of such forward looking statements include, but are not

limited to, statements regarding exchange rate fluctuations, volume growth,

increases in market share, total shareholder return, executing our growth

projects, (including LCCP), oil and gas reserves and cost reductions, including

in connection with our BPEP, RP and our 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. These factors are

discussed more fully in our most recent annual report on Form 20-F filed on 28

August 2017 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.

Please note: A billion is defined as one thousand million. All references to

years refer to the financial year 30 June.

Any reference to a calendar year is prefaced by the word "calendar".

Comprehensive additional information is available on our website:

http://www.sasol.com

Contact:

Cavan Hill

Senior Vice President: Investor Relations

Telephone: +27(0)10-344-9280

Alex Anderson

Head of Group Media Relations

Direct telephone: +27(0)10-344-6509

Mobile: +27(0)71-600-9605

alex.anderson@sasol.com

Matebello Motloung

Senior Specialist: Media Relations

Direct telephone: +27(0)11-344-9256

Mobile: +27(0)83-773-9457

matebello.motloung@sasol.com

Source: Sasol Limited