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.
- 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.
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 HillSenior Vice President: Investor RelationsTelephone: +27(0)10-344-9280 Alex AndersonHead of Group Media RelationsDirect telephone: +27(0)10-344-6509Mobile: +27(0)71-600-9605 firstname.lastname@example.org Matebello MotloungSenior Specialist: Media RelationsDirect telephone: +27(0)11-344-9256Mobile: +27(0)83-773-9457 email@example.com SOURCE Sasol Limited