Sasol has insured itself against rand/dollar
volatility in 2018 by buying contracts allowing it to swap rand for up
to $4bn at an exchange rate of between R13.46/$ and R15.51/$, the
chemicals group said on Tuesday.
"These hedges approximate 70% of the company’s expected net rand/dollar exposure in the 2018 financial year," Sasol said in a statement.
On the one hand Sasol benefits from a weak rand making its South African coal-to-fuel operations more profitable, but on the other it suffers because of rising costs for its Lake Charles chemicals project in Louisiana.
In February, when the rand strengthened to under R13/$ and was heading under R12.50/$, before President Jacob Zuma’s disastrous Cabinet reshuffle, Sasol said in its interim results statement: "We have revised our capital expenditure estimate [for Lake Charles] from R75bn to R66bn for the full year, largely due to the impact of the stronger rand/dollar exchange rate coupled with our cash conservation initiatives and active management of our capital portfolio."
Now, after the rand’s sharp U-turn since March 24, Sasol said it had insured itself against the rand plunging too far during the financial year in which it expects its debt-to-earnings ratio to peak as it completes its US project.
Sasol said it was "reviewing other commodity and currency hedges to protect and strengthen the balance sheet, as measured in terms of its gearing and net debt to earnings before interest, tax, depreciation and amortisation (ebitda) targeted levels".
"Hedges with a total notional amount of $4bn (averaging $1bn per quarter) have been put into place, with an annual average floor of R13.46/$, and an annual average cap of R15.51/$. These levels approximate the quarterly averages.
"These hedges will provide Sasol with some cash flow and balance sheet protection, as gearing and net debt to ebitda levels are expected to peak during the 2018 financial year."
"These hedges approximate 70% of the company’s expected net rand/dollar exposure in the 2018 financial year," Sasol said in a statement.
On the one hand Sasol benefits from a weak rand making its South African coal-to-fuel operations more profitable, but on the other it suffers because of rising costs for its Lake Charles chemicals project in Louisiana.
In February, when the rand strengthened to under R13/$ and was heading under R12.50/$, before President Jacob Zuma’s disastrous Cabinet reshuffle, Sasol said in its interim results statement: "We have revised our capital expenditure estimate [for Lake Charles] from R75bn to R66bn for the full year, largely due to the impact of the stronger rand/dollar exchange rate coupled with our cash conservation initiatives and active management of our capital portfolio."
Now, after the rand’s sharp U-turn since March 24, Sasol said it had insured itself against the rand plunging too far during the financial year in which it expects its debt-to-earnings ratio to peak as it completes its US project.
Sasol said it was "reviewing other commodity and currency hedges to protect and strengthen the balance sheet, as measured in terms of its gearing and net debt to earnings before interest, tax, depreciation and amortisation (ebitda) targeted levels".
"Hedges with a total notional amount of $4bn (averaging $1bn per quarter) have been put into place, with an annual average floor of R13.46/$, and an annual average cap of R15.51/$. These levels approximate the quarterly averages.
"These hedges will provide Sasol with some cash flow and balance sheet protection, as gearing and net debt to ebitda levels are expected to peak during the 2018 financial year."
No comments:
Post a Comment