Investors punish Sasol over new results delay

● Petrochemical giant Sasol kicked out the publication of its annual results by up to six weeks on Friday, the second postponement in a month, sending its stock tumbling.

Shares in Sasol were down more than 5% after it said its results will not be published later this month but only by the end of next month as the board wants more work to be done on an independent review it commissioned earlier this year.

SA’s largest industrial company is half a decade into a multibillion-dollar investment in its Lake Charles facility in Louisiana in the US. The project has been plagued by cost overruns and delays, weighing on Sasol’s share price, which has fallen 50% in the past year.

In May the company announced that its board had commissioned an independent review to ascertain the factors that led to the cost and schedule changes for the project.

The project, one of the decade’s largest foreign investments into the US, was initially billed to cost less than $6bn (around R65bn at the time), but this year it became clear that it would be closer to $13bn.

And Sasol’s board now wants more to be done before the company’s auditors can sign off its results.

“The board is focused on resolving this as soon as possible and all efforts are being made to get to a swift outcome without compromising the integrity of the processes under way,” the company said.

The review should be done by mid-October, according to Sasol.

Investors have not looked kindly on results postponements by JSE-listed companies since Steinhoff International delayed publication of its financials due to accounting irregularities in December 2017. Such announcements have generally been greeted by a sharp sell-off.

The JSE’s director of issuer regulation, John Burke, said the exchange is engaging with Sasol.

And Sasol has also moved to reassure investors in a separate post on its website.

“We expect to release financial results by no later than October 31 2019. This timeline will not result in the suspension of our JSE or NYSE [New York Stock Exchange] listing,” the company said.

Sasol shares closed down 4.5% at R259.31 on Friday

Sasol’s investment in the US is a bet on rising global demand for plastics.

It is building an ethane cracker at Lake Charles to process shale gas into polyethylene, which ultimately becomes the type of plastic used in shopping bags, among other things.

“While project delays and capital cost increases have substantially reduced the economic attraction for investors, Sasol is well positioned to benefit from the increasing polyethylene demand,” Kagiso Asset Management said in a note.