South African petrochemicals giant Sasol Ltd. said it has cut 1,500 jobs, the latest big round of layoffs in a global oil sector scrambling to cope with the oil-price rout.
Sasol said it was also slashing its dividend to weather lower oil prices, even as it reported a big jump in second-half 2014 profit.
Net profit for the six months ended Dec. 31 rose 54% to 19.54 billion South African rand ($1.62 billion) from 12.71 billion rand in the corresponding period of 2013, Sasol said, against revenue of 99.83 billion rand. Revenue was 98.27 billion rand in the year-earlier period.
In line with a February warning, Sasol said it would cut its dividend by 12.5% to seven rand in a bid to build a cash pile over the next 30 months in response to low global oil prices.
It also said it had pushed through 1,500 voluntary redundancies and early retirements in the six months to Dec. 31, as part of a plan to drastically cut payroll costs. It said it would continue with “additional organizational structural refinements” as well as a 30-month freeze in new hires for 500-1,000 vacancies.
Sasol runs oil, gas and chemicals businesses from South Africa to the U.S. and Europe.
The company outlined additional policies totaling 30 billion rand to 50 billion rand that it will push through under its so-called “Response Plan” to cope with prolonged low oil prices, including cutting four billion rand to seven billion rand in cash costs over the next 30 months and then a billion rand annually.
It also said it would further postpone its $14 billion gas-to-liquid plant in Louisiana, one of the biggest investments in the U.S. and a key project for Sasol, for the same reasons.
“Decisive measures have already been agreed to and key decisions have been taken to conserve cash, including the delay of our gas-to-liquids plant in the U.S., the change to our dividend policy as well as the further optimization of our organizational structures,” it said in a statement.
It said its profitability in the second half of 2014 was boosted by 9% by a weaker rand exchange rate against the U.S. dollar, but that this was partly offset by 19% lower Brent crude oil prices over the same period.
Sasol is the latest major oil company to roll out big job cuts and other aggressive savings measures. Total SA said last month it would cut 2,000 jobs through to 2017. Service companies have been hit especially hard as they struggle with falling orders from their oil company clients, or demands for reduced pricing. Schlumberger Ltd. , a major oilfield-services provider, said in January it would cut 9,000 jobs.
By Matina Stevis