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Johannesburg - Sasol, the world's largest producer of fuel from coal, on Thursday advised investors that it was "revising and reprioritising" some of its planned projects in the light of the changed market conditions.
Sasol chief financial officer Christine Ramon said in a letter to investors that market conditions have deteriorated in recent months due to the global economic downturn.
The group last week indicated that its businesses continue to generate considerable cash flows despite the turmoil in global markets, but that it did expect the second half of the financial year to be more challenging.
Ramon confirmed that the company had revised its outlook for the financial year to end June 2009 to a "moderate reduction in earnings forecast for 2009 compared to the prior year".
This compares starkly to its previous forecast of "robust growth" for the financial year.
"Sasol has a positive cash position and has entered a cash conservation mode given the global economic crisis," reassured Ramon, adding that the group would continue to manage its balance sheet prudently.
To this end it has lowered its targeted gearing (net debt to equity ratio) from the previous range of between 30% and 50% to between 20% and 40%.
The group is also simultaneously undertaking a comprehensive group-wide review of its compliance with competition law.
Sasol has committed to adopting appropriate remedial steps and to disclose material findings as and when appropriate.
This review was initiated in July last year, three months before the group was fined €318.3bn by the European
Commission for heading up a paraffin wax cartel and violating antitrust laws.
The group had made no provision for this fine and has yet to detail the extent of the provisions it might make to insure it against possible penalties as a result of this review.
Sasol envisages that the review process will be completed during the first half of calendar year 2009.
"The overarching objective of our growth plans remains unchanged: to ensure we prudently manage our resources and pursue those projects that are in the best interests of our shareholders and other valued stakeholders," said Ramon.
Sasol said it would provide more detail on its capital expenditure forecasts when it releases its interim results on March 9.
Shares in Sasol closed 1.30% or R3.59 lower at R272.01 on the JSE on Thursday.
The stock has shed 2.86% of its value this year to date.
- I-Net Bridge