Sasol Limited (SSL)
Investor Strategy Day Conference Call
April 9, 2013 10:30 am ET
Raj Naidu – Executive-Investor Relations and Shareholder Value Management
David E. Constable – Chief Executive Officer
Christine Ramon – Chief Financial Officer
André de Ruyter – Senior Group Executive-Global Chemicals and North American Operations
Giullean Johann Strauss – Senior Group Executive- International Energy, New Business Development & Technology
Alex R. Comer – JPMorgan Securities Plc
Previous Statements by SSL
» Sasol's CEO Discusses F2Q13 Results - Earnings Call Transcript
» Sasol's CEO Discusses F4Q12 (Year-End) Results - Earnings Call Transcript
» Sasol's CEO Discusses F2Q12 Results - Earnings Call Transcript
My name is Raj Naidu and I am the Head of Investor Relations at Sasol. And today we have David Constable, our Chief Executive Officer; Christine Ramon, our Chief Financial Officer and Executive Director. We have André de Ruyter, our Senior Group Executive for Chemicals and North American operations. Lean Strauss, our Senior Group Executive for international energy, new business development. And we also delighted to have Nolita Fakude, another Executive Director in attendance as well.
The structure of today is as follows. We’ll have a presentation in two parts with Q&A following each part. So I’ll just ask you to please direct your questions to the relevant segment and save general questions just to the end to the final Q&A session. We’ll have an informal lunch after that Q&A session at the back of the room, where you’ll have a chance to interact with management. And for those of you that are waiting here for the closing ceremony, you’re requested to remain in this area. So you have few minutes to catch up with the office and also make use of the New York Stock Exchange Wi-Fi facilities. The closing ceremony will happen in a room behind us at 3 o'clock, so you are invited to join us for cocktails from the 3 o'clock. And you’ll be direct accordingly by the New York Stock Exchange officials.
I just wanted to draw your attention in your presentation to the forward-looking statements as is customary. And before David sets the scene for the presentation, I'd like to invite the New York Stock Exchange to give us the safety briefing.
Unidentified Company Representative
Good morning folks. I’m one of the five safety directors for 11 Wall Street. Welcome to New York Stock. My name is [Frank Bavaro]. I’ll be very quick. There are three egress points from this floor. They’re all stairways. Behind us those – behind those two double doors to the right is the C stairway that terminates on Broad Street. And to the north end over here, the B stairway, that terminates on Broad Street. And then we have the A stairway at the reception desk when you come off the elevator cars, the A stairway that would terminate at Wall Street.
If by some chance there was an emergency or fire signal, you’d see strobe lights and speaker announcements directing you to the exit facilities along with the events personnel.
Elevators are off limits for a number of reasons. The stairways are the means of egress in case there is a fire emergency on this floor. Again, C stairway behind you, B stairway to the north end and A stairway to the west side by the reception area by the elevator cars. Thank you very much and enjoy your stay at NYSE.
David E. Constable
Good morning, everyone. Thank you for taking the time to join us this morning and be with us for our Investor Strategy Day here at the New York Stock Exchange. And I also thank you to those of you on the phone calling in form wherever you maybe. Not only is it important investor engagement for us at Sasol as Raj mentioned, in addition, today is a significant milestone in the company's 63 year history. This afternoon we’ll be celebrating the 10th anniversary of our listing on the NYSE with the closing bell ceremony and, as Raj mentioned, the cocktail event after that. Hope that all of you here will be able to join us as we commemorate the occasion.
With this in mind, we just take a quick moment to look at a short video which highlights some of Sasol’s key milestones and achievements over the years.
Great. As you can see from the video, Sasol has grown dramatically over the past six decades. What lies ahead will result in the further advancement of our company’s progress across many fronts and across continents.
So as much as we are celebrating our past achievements, today is also very much about the company’s future. Once commissioned, the U.S growth projects will be showcasing this morning will grow the company’s production volumes by more than 75% and will cement our position in the country across several industry sectors.
Now let’s turn to what we’ll cover in today's session. In broad terms, our agenda for the next 3.5 hours comprised two distinct halves. In the first half and it’s probably setting the scene, I will highlight the key strategic names that have come to epitomized the last two years for us at Sasol. Here I will also talk to our strategic review, development and execution process.
To close off the first half, Christine will focus on three key elements, which underpin our financing considerations. First, capital allocation and our portfolio management process. Second, the importance of prioritizing our pipeline and projects. And third, our funding considerations and timing to ensure that we remain within our targeted gearing levels and that we deliver on our progressive dividend policy. We’ll then open up for any questions that you may have before we adjourn for a break.
Looking at the second half of our session, here is where we will focus on our North American priorities and projects and our unique value proposition. Our decision to precede the front-end engineering and design in both our Lake Charles Chemical Project or LCCP and our U.S. gas-to-liquids value-added chemicals conflicts were informed by detailed project feasibility studies and a robust interrogation of the analyses presented by the project teams at the end of last year.
Today, we will share with you the work we’ve been doing since the project announcements in December, to ensure that both projects can be successfully competed utilizing a phased execution approach. We’ll provide you a feedback on the key project role players and structures we have put in place. We will also share our overall implementation approach.
I’ll kick off the second half with an overview of our U.S. project priority areas and then hand it over to Lean who will talk us through our technology and feedstock advantages. From there, André will provide greater clarity on why our U.S. projects make for a compelling business case, when we look at the markets we will be operating in.
André will also talk specifically to our project execution capability. I’ll come back up to close up our formal presentation, and then we’ll open it up to any further questions you may have. By the end of this session, our objective is to have given you greater insight into these important U.S. growth initiatives, so that we are collectively aligned going forward.
Our last Investor Strategy Day was on April 5 in New York just over two years ago. The focus in 2011 was on highlighting our technology-driven fuels and chemicals growth, which makes us both unique and compelling investment propositions. The team showcased our Canadian gas acquisitions and our GTL aspirations. We spoke at a concept level of the importance of identifying great new global project opportunities.
Now, I joined the Company soon thereafter. My primary mandate is to ensure that we maximize long-term shareholder value as measured by TSR and that as the management team; the decision we take now will stand the test of time and deliver outstanding results.
To achieve this, the past couple of years can be broken into three distinct phases. The first phase is about goal-setting and consolidation, which ramps throughout financial year 2012. Here, we refocused the organization on our common objectives and introduced, streamlined in less bureaucratic structures. We also started the process of embedding a high performance values-driven culture to the introduction of our revised company values and refined strategic agenda.
To ensure that we’re able to compete more effectively, the second phase is all about stepping up our prioritization efforts to enable the company to focus on the important and the urgent. Here, we prioritize enhancing operational reliability and stability. We drove production efficiencies, particularly in our international chemicals businesses and we took a hard and skeptical look at our portfolio projects.
Having completed the prioritization work, it was evidenced that given our current position, we had to adopt a multi-pronged approach to our third and current phase, delivery and growth. In Sasol terms, we’ve heard that the dual focus to regional growth strategy is being one of nurture and grow in Southern Africa where the emphasis is as much on maintaining and enhancing our existing asset base, as it is on growing in new areas here most notably in power generation both in South Africa and Mozambique.
Looking to North America, here we speak of expand and deliver, as we set out to advance on several fronts. In the context of our U.S. projects specifically, to achieve the business success we’re aiming for, we need to deliver on our projects milestones in full, on budget, on schedule and with the quality required to ensure successful plan start-ups in ongoing operations.
Turning to our existing operations, particularly in South Africa, we have sharpened our ongoing focus on optimizing cost across the group. Our cost containment diagnostic work is almost complete, where after we will take the necessary steps to ensure that our cost base is fit for purpose and sustainable.
Now all that I’ve spoken to you so far relates to the near to medium-term. however, our definition of victory of growing shareholder value sustainably is as dependent on our current strategies as it is on our longer-term strategic direction.
Here, our strategic review, development and execution process is paramount. 14 months ago, we embarked on an extensive corporate strategy evaluation process. The evaluation is largely driven by three key factors. First, the significant changes in the global environment of the past four to five years, not only in the context of the persisting financial crisis, but also given changing market dynamics, certain governments becoming far more interventionist and the general climate particularly in the Africa of socio-political unrest.
Second, as we move forward on game-changing projects, which will come to fruition later this decade, we need to be confident that pursuing a GTL and chemicals focus will remain robust over several decades. And finally, we know that it will deliver meaningful results over the long-term. We need to better understand and plan for a future that takes our company well beyond 2020.
We started by defining and properly understanding our business and regional growth opportunities, where do we want to play, what regions and what do we want to be playing. Will it be CTL or coal-to-liquids, LNG, non-integrated upstream oil and gas production, mobility technologies, or possibly regional power generation? To answer these questions about the future, our strategy review and development process comprise three stages.
As a part of stage one, the team reviewed all of our businesses to determine our current reality, so that we had a good sense of where we stand as an organization today. A lot of time was also spent on developing scenarios to determine what the world might look like decades from now.
Here, the team focused on regional dynamics, and alternative energy penetration. This stage culminated in a piece of work, which we call to envisioning the future, and important step would set our possible Sasol futures and answer the questions such as, where will we find ourselves, what do we want to be known for and how have we evolved as an organization.