Sasol expects earnings losses at Lake Charles plant, plans for some salary reductions

Sasol expects earnings losses at Lake Charles plant, plans for some salary reductions
Sasol (Source: Sasol)

LAKE CHARLES, La. (KPLC) - Sasol is expecting major losses from its Lake Charles plant this year, the South African company announced Thursday.

Earnings expectations for the Lake Charles Chemical Project have been revised to a loss of between of $50 million to $100 million for 2020. That’s a swing from an expectation of positive earnings of between $50 million to $100 million.

“Despite the Lake Charles Chemical Project (LCCP) ramp up continuing in line with expectations for operational performance, further price weakness means that the earnings before interest, taxes, depreciation, and amortisation (EBITDA) contribution from LCCP for financial year 2020 has been revised to a loss of between US$50-US$100 million. This compares to the previous guidance of a positive EBITDA of US$50-US$100 million before the price weakness as a result of the decline in oil prices and the COVID-19 global demand reduction.”

Sasol also announced Thursday that it is implementing “cash conversation measures,” including salary reductions for the board of directors, executives, and supervisors over the next eight months.

The cuts range from 20 percent for employees in executive to senior manager levels to 10 percent for employees at supervisory levels.

“The company will also introduce a global salary sacrifice for employees from supervisory and specialist levels upwards, who do not form part of collective bargaining arrangements. This will be implemented in line with the respective legal requirements in different countries, according to a sliding scale.

"Furthermore, Sasol will forgo salary increases in the new financial year, to all employees outside of its collective bargaining arrangements globally, and no short-term incentives will be payable this year.”

The board of directors will see reductions of between 20 and 40 percent.

Sasol President and CEP Fleetwood Grobler will donate 33 percent of his salary to a fund set up by the South African government to fight against COVID-19. In the next five months, his salary will be cut 20 percent as part of the company’s cash conservation plans.

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