Sasol slumps on gloomy trading update
The LCCP is now expected to contribute only between $50million (R748.56m) and $100m to the group’s earnings before interest, tax, depreciation and amortisation (Ebitda) as a result of fire and an explosion about two weeks ago.
Sasol said the LCCP was 99percent complete and the fire only caused damage to a low-density polyethylene unit. LCCP’s capital expenditure on the overall project is estimated at $12.5 billion.
Sasol had already lowered the contribution from LCCP for the year to between $150m and $300m, which was already down from earlier projections of $300m to $350m, citing technical issues and delays.
“Earnings are further impacted by approximately R1.7bn in additional depreciation charges and approximately R2bn in finance charges for financial half year 2020 as the LCCP units reach beneficial operation,” the group said.
The group added that as the LCCP units progress through the sequential beneficial operation schedule, the costs associated with the relevant units were expensed while the gross margin contribution follows the planned volume ramp-up profile and inventory build.
The LCCP has resulted in the group expecting its adjusted Ebitda to decline by between 22 percent and 32 percent for the six months to end December, down from R26.8bn reported last year.
The share price declined to its lowest level on Friday to R226.02 a share. It closed the day at R239.17.