JOHANNESBURG – South African petrochemicals group Sasol will look to offload around $1 billion in assets across its portfolio and only retain those that generate the highest returns on investment, the company said on Monday.
Sasol which employs around 30,000 people across 33 countries including China, Italy and the United States, said it would withdraw from assets that did not offer sufficient returns.
“We will retain or fix those assets that will increase our returns while exiting those that are not in line with our strategy and have lower than desired returns,” said joint president and chief executive officer, Bongani Nqwababa at its results presentation.
The firm said it would look at all its assets, including those in South Africa, Europe and North America, and evaluate them based on trading environment, potential return generation and whether they fit Sasol’s strategy.
“It’s likely that we would end up probably having some sort of assets in most of the regions,” said joint president and chief executive Stephen Cornell.
Sasol previously pulled out of its gas-to-liquids greenfield projects including one in Louisiana, which was expected to cost $13 billion to $15 billion and would have been the biggest investment abroad by a South African company.
Shares in Sasol were up 3.30 percent to 407.51 rand by 1308 GMT after reporting a 17 percent rise in first-half profit, boosted by higher crude oil prices.
“The business is now in better shape than it was two or three years ago and we are seeing that in the numbers,” said Hanré Rossouw, a Cape Town-based fund manager with Investec which has shares in Sasol.
Sasol said ratings agency Moody’s decoupled the company from the sovereign rating which would allow it to a have higher rating and borrow more cheaply than the government.
The Sasol board also changed its dividend policy to pay them on a range based on core earnings per share, which the firm believes reflects the sustainable business operations and is a measure of its business and financial performance.
Sasol declared a gross interim dividend of 5.00 rand ($0.43) per share, up from 4.80 rand the previous year.
“The dividend underpins their commitment to enhanced shareholder returns,” Rossouw said.
($1 = 11.5202 rand)