CEOs of Sasol, hit by higher costs at US project, to exit

Sasol announced the departures and a decrease in adjusted earnings for the year ended in June before South Africa’s stock market opened. At 0716 GMT, shares of Sasol were up 9%.

A file picture shows the logo of Sasol at its headquarters in Johannesburg. Picture: AFP.

JOHANNESBURG - Petrochemicals group Sasol said on Monday its joint chief executives are stepping down following a review of a project in the United States hit by delays and rising costs.

Sasol announced the departures and a decrease in adjusted earnings for the year ended in June before South Africa’s stock market opened. At 0716 GMT, shares of Sasol were up 9%.

The Lake Charles Chemicals Project (LCCP) was initially expected to cost $8.9 billion but that 2014 forecast has since been revised to as much as $12.9 billion.

The company said Bongani Nqwababa and Stephen Cornell, the joint CEOs, who have not been found to have committed misconduct nor shown incompetence, would step down at the end of this month to restore trust in Sasol.

Fleetwood Grobler, the executive vice president of its chemicals business, will assume the role of president and CEO effective November, it said.

“It is a matter of profound regret for the Board that shortcomings in the execution of the LCCP have negatively impacted our overall reputation, led to a serious erosion of confidence in the leadership of the Company and weakened the company financially,” Sasol said in a statement.

Following the independent review, Sasol said some factors behind the cost and schedule increases were common in projects of the size and nature of the LCCP, but some shortcomings could have been avoided.

“The primary responsibility for shortcomings in relation to LCCP lies with the former leadership of the LCCP’s Project Management Team (PMT), which engaged in conduct that was inappropriate, demonstrated a lack of competence, and was not transparent,” Sasol said, adding that findings did not show an intent to defraud the company.

Sasol, the world’s top manufacturer of motor fuel from coal, said insufficient experience within the LCCP leadership, inadequate control procedures, insufficient segregation of duties, poor ethics procedures and a culture of fear leading to insufficient reporting of the LCCP leadership team prevented the prompt the identification of the errors.

The company, which twice delayed the release of its annual financial results due to possible “control weaknesses” at the project, on Monday reported a 5% rise in annual profit and shelved its final dividend as the firm sought to strengthen its balance sheet.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) decreased 9% compared to the prior year due to lower chemical product prices and higher operating costs from LCCP.

Sasol said it would not pay a final dividend for the 2019 financial year to protect and strengthen its balance sheet and may consider shelving the 2020 interim dividend based on the health of the balance sheet at that time.