South Africa’s Sasol delays results due to US project glitch

Updated 16 August 2019

South Africa’s Sasol delays results due to US project glitch

  • “Management and the board will assess such control weaknesses and identify whether any further remedial actions are required,” the company said
  • In May, Sasol had increased the expected cost of the US project by around $1 billion

JOHANNESBURG: Sasol Ltd. 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 company said, without providing further details.
In May, Sasol had increased the expected cost of the US project by around $1 billion following a review by 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.
Sasol spokesman Alex Anderson said the group’s financial controls were sound and it had no concerns about its financial reporting.
“This is a situation where a relatively small team, the LCCP project management team, although working very hard, did not have adequate segregation of duties and failed to engage the wider financial organization to verify the accuracy of their forecast,” Anderson said referring to the cost forecast for the project.
The company said it had implemented initiatives to improve decision making, transparency and documentation within the project management team.
It has also segregated duties between project controls and finance functions and assigned a senior vice president who is responsible for the project’s controls.
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 the 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 initially expected to cost $8.9 billion in 2014 and has seen delays and cost increases.
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 of between 1% and 11% — to remain the same.
Headline earnings is the main profit measure used in South Africa that strips out certain one-off items.
Shares in Sasol, the world’s biggest maker of motor fuel from coal, were down 4.23% to 266.38 rand at 1444 GMT, after trading as low as 233.93 rand, their lowest since November 2008.


Abu Dhabi carrier Etihad launches more fuel-efficient Boeing 787 Dreamliner

Updated 30 min 44 sec ago

Abu Dhabi carrier Etihad launches more fuel-efficient Boeing 787 Dreamliner

  • Etihad’s CEO Tony Douglas described the aircraft as a flying laboratory for testing that could benefit the entire industry
  • This year, Etihad flew the world’s first passenger flight using sustainable biofuel made from a plant that grows in saltwater

DUBAI: Abu Dhabi’s flagship carrier Etihad Airways announced on Monday it is launching one of the world’s most fuel-efficient long-haul airplanes as the company seeks to save costs on fuel and position itself as a more environmentally-conscious choice for travelers.
Etihad’s “Greenliner” is a Boeing 787 Dreamliner that will depart on its first route from Abu Dhabi to Brussels in January 2020. Etihad’s CEO Tony Douglas described the aircraft as a flying laboratory for testing that could benefit the entire industry.
With fuel costs eating up around a quarter of airline spending, Douglas said the goal of the Greenliner is to be 20 percent more fuel efficient than other aircraft in Etihad’s fleet.
“This is not just a box-ticking exercise,” he told reporters at the unveiling of the initiative at the Dubai Airshow alongside executives from Boeing.
Douglas said the aircraft “not only makes sense economically from a profit and loss account point of view, but because it also directly impacts the CO2 because of the fuel burn.”
Etihad has reported losses of $4.75 billion since 2016 as its strategy of aggressively buying stakes in airlines from Europe to Australia exposed the company to major risks.
Despite its financials, the airline continues to be among the most innovative.
This year, Etihad flew the world’s first passenger flight using sustainable biofuel made from a plant that grows in saltwater. It also became the first in the Middle East to operate a flight without any single-use plastics on board to raise awareness of the effects of plastic pollution.
Aviation accounts for a small but rapidly growing share of greenhouse-gas emissions — about 2.5 percent worldwide. But forecasters expect air travel to grow rapidly in the coming years.
Etihad says it plans to make the Greenliner a “social media star” to bring under sharper focus its developments and achievements worldwide. Douglas said anything that Eithad learns with Boeing from this aircraft’s operations will be open domain knowledge “because it’s about moving the industry forward in a responsible fashion.”
“We’re like a millennial and like all good millennials, they’re really focused on the environment and the sustainability agenda,” Douglas said, referring to Etihad’s 16 years in operation.
The Greenliner will be the only aircraft of its kind in Etihad’s fleet of Dreamliners. The company currently has 36 of the 787s in its fleet with plans to operate 50.
“This is a small step today, but in a very, very long journey,” Douglas said.