Sasol's share price fell the most in 20 years on the JSE on Friday after Sasol postponed the release of its annual results, saying it had not completed a review of problems affecting a giant chemicals project in the US.
The share dropped as much as 16%, the biggest intraday decline since September 1998, as the beleaguered Lake Charles project in Louisiana continued to sap investor confidence. Costs at the flagship development have swelled 50%, from initial estimates to almost $13bn (R197bn), amid weather delays and construction setbacks.
"The board has decided to delay the announcement of Sasol's 2019 financial results until the independent review and external audit has been completed," the company said on Friday. Results were due to be released tomorrow. Sasol now expects to announce results on September 19.
The troubles at Lake Charles have hampered Sasol's plans to expand internationally and to increase chemical manufacturing alongside its core fuel production business. In May, Sasol hiked the cost estimate for the project by $1bn, after raising the budget three months earlier.
The board received a preliminary report earlier this week following an independent review of the obstacles that have hampered Lake Charles. Sasol also announced a fresh problem, saying the start of an ethane cracker had been delayed by a technical glitch.
Wayne McCurrie of FNB Wealth and Investments said: "If Sasol had not embarked on Lake Charles, then the share price could be R500, maybe even more. Sasol management has destroyed massive value here and they must be held to account."
The stock has declined more than 50% in the past 12 months. On Friday it closed down almost 5% at R265.
McCurrie said: "I can't see the share price falling more ... But they've got massive cashflow problems, very large debt. They are probably going to sell something." He added: "It's no good selling Lake Charles now. You're not going to get any real money for it."
Once completed, Lake Charles will boost the portion of chemicals in Sasol's sales mix to 70%. The chemicals complex was approved in 2014.
Bloomberg and Asha Speckman
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.