Sasol, which was hit hard by the impact of Covid-19 on fuel demand, is ready if it happens again.
Exiting CFO Paul Victor said that Sasol expects asset sales and robust crude and chemical prices to continue to buoy cash flow this year. However, he added that a resurgence of Covid-19 in China could depress that outlook.
Sasol reported a cash generation of over R50 million per day for the year ended 30 June. "We will generate an equal significant amount this year," Paul told Reuters. He added it would be enough to meet debt obligations, the first of which kicks off in November 2022.
The fuel manufacturer, which is battling a significant amount of debt, saw fuel demand and prices plummet during the initial lockdowns of Covid-19 last year as travel and movement was restricted worldwide. Sasol’s investors wrote off the company as being on the brink of bankruptcy at the time.
The company’s shares recovered after various restructuring efforts and a recovery in the demand of petrochemicals as the hard lockdowns were lifted.
Paul says that if China has another outbreak, that could sink the demand for chemicals again, but that Sasol is ready for it this time. The company had brought its costs down to a level where, if the crude oil price falls to $55 (R822) per barrel, it would still be making money. Its asset sales, which began last year, will top $4.5 billion (R67.23 billion) by December 2021, providing additional cash security to the company.