South Africa’s Sasol delays results due to US project glitch
South Africa’s Sasol delayed the release of its annual financial results on Friday due to possible “control weaknesses” at its US ethane cracker project, sending shares in the chemicals and energy company down by more than 15%. Sasol said its auditors would need to consider an independent report the board had commissioned into its Lake Charles Chemicals Project (LCCP) and therefore expected to announce fiscal 2019 results on Sept. 19 instead of Aug. 19. “Management and the board will assess such control weaknesses and identify whether any further remedial actions are required,” the firm said in a statement, without providing further detail.
The firm raised expected costs in May by around $1 billion (SR3.8 billion) following a review by the project’s new management that revealed oversights such as duplicate credits and overlooked contracts, adjustments for potential insurance claims, procurement back-charges and remaining work and repairs.
The company said it still expected cost guidance for LCCP to between $12.6 billion and $12.9 billion but that it now expected full production at the project to be delayed to around Aug. 26 from the previous guidance of end of July after a technical challenge relating to a large heat exchanger.
The project in Louisiana, which will convert natural gas into plastics ingredient ethylene, was expected to cost $8.9 billion but has seen delays and hikes in costs. Sasol, which is delaying its results for the first time, said it expected guidance given in July — for a rise in annual core headline earnings per share (HEPS) of between 1 percent and 11 percent — to remain.
HEPS is the main profit measure used in South Africa that strips out certain one-off items.