Sasol tweaks dividend policy as oil prices drop

Johannesburg - Petrochemicals group Sasol [JSE:SOL] signalled on Wednesday it will cut its dividend to save cash in the face of falling oil prices, sending its shares sliding over 10%.

The company said in a statement that it was changing its progressive dividend policy - which meant maintaining or growing dividends - for a cover range based on earnings.

This policy gives Sasol the flexibility to pay lower dividends rather than maintaining or growing them.
 
"We are underway with the accounting process to finalise our interim results ahead of our earnings announcement on 9 March. Accordingly, the board has yet to decide on the dividend," spokesperson Alex Anderson said.

The revised policy is based on a dividend cover range, which will be similar to the dividend cover rates applied during the 2008 to 2014 financial years.

"By definition a change in dividend policy is a surprise to investors, so you are seeing a sell-off. We are expecting a big dividend cut," one analyst, who has a buy recommendation on Sasol and declined to be named, told Reuters.

Oil dropped below $62 a barrel on Wednesday with prices hovering near six-year lows on worries of a glut caused primarily by unexpectedly high production of US shale crude.