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Sasol Ltd. (NYSE:SSL)
Q4 2020 Earnings Call
Aug 17, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to this broadcast of Sasol Ltd's Financial Results for the year ended 30 June, 2020. Your speakers for this broadcast are Fleetwood Grobler, President and Chief Executive Officer; and Paul Victor, Chief Financial Officer. Peter will open this broadcast by sharing an overview of Sasol's business results. Paul Victor will then cover the financial results for the reporting period. Following, this Fleetwood will conclude on the topic, Future Sasol.

For your awareness, please note the contents of our Safe Harbor note regarding forward-looking statements and definitions, as it relates to the contents of this presentation. Please note, this broadcast is approximately 45 minutes. Sasol's President and CEO, Fleetwood Grobler will now address you.

Fleetwood Grobler -- President and Chief Executive Officer

A very warm welcome and thank you for taking the time to watch our financial results review. Our full year results are characterized by a story of two halves. Despite the challenges we faced in the first half of the financial year, Sasol delivered a sound operational performance. The second half, saw the COVID-19 pandemic cause a seismic shift in our operating context, underscored by significant volatility and uncertainty. This financial year was also our peak gearing period, as we approached the near completion of the LCCP. Geopolitical dynamics in the latter half of the year saw the Brent crude oil price collapse to 21-year lows, while the onset of the pandemic placed even greater pressure on our balance sheet. These external shocks impacted Sasol dramatically, requiring us to act swiftly to stabilize the business in the short term through decisive actions.

As critical as these measures are, in tandem, we had to chart a path forward, to ensure Sasol remains sustainably profitable in a low oil price environment, It is safe to say, that in the past months, we have navigated volatility, that I have not seen in over 36 years at Sasol, this has required enormous commitment and efforts from team Sasol and I would like to recognize the exceptional effort of our people through this most challenging period.

Let me now turn to what you will hear from us today. We remain relentless in our journey toward zero harm and continue to reinforce our program for the prevention of high severity insurance, to mitigate the impacts of COVID-19, we have developed an integrated response to ensure the well-being of our employees and communities. At the same time, we have implemented robust measures to facilitate business continuity and most of our operations are now returning to normal run rates.

On LCCP, construction is essentially complete and costs remain within our guided range. Our financial performance is a reflection of the significant disruption from macroeconomic headwinds, particularly in the second half of the year. Interest bonds, one of the early decisive steps we took, was to conserve cash in the order of $1 billion. We exceeded this target in less than four months. Beyond this, our other response plan measures are on track, including our expanded and accelerated asset divestment program.

Zero Harm is our Apex ambition and it is our goal we pursue with relentless determination. Regrettably, we experienced six tragic fatalities this past year. Our condolences go out to the families friends, and colleagues of Johannes Mlangeni, Tisetso Matlele, Doctor Ngwenya, Edward Sikhonde, Obert Khoza, and Welile Kanku. One fatality is simply one too many. As CEO, I'm personally involved in the investigations into every fatality. Our aim is to fast-track investigations to quickly establish the root causes. This allows us to address underlying risks and implement measures to prevent a reoccurrence. Our safety processes, systems and tools are world class, and therefore our focus continues to embed the use of these, as a second nature in the hearts and minds of our people, because we care. Ultimately this is so that we all return safely to our loved ones at the end of each day.

Our leaders are expected to be visible and demonstrate personal accountability, particularly in driving Sasol's program effectiveness of the prevention of high severity injuries. As cases of the coronavirus increase globally, we promptly put measures in place to curtail it's spread. This we did by establishing a groupwide COVID-19 response team, mandated to oversee and coordinate our various undertakings. To support and protect the well-being of our people and stakeholders, we enabled working from home and revised shifts and work schedules, to support social distancing and de-crowding at all our operations. Various safety interventions were implemented, such as increased screening, disinfection and contact tracing.

In Secunda, we converted hostels into quarantine and self-isolation facilities for recovering employees and contractors. We also recognized our duty to step up and show support for those in need across our regions and fence line communities. In South Africa and Mozambique, we donated thousands of liters of sanitizer to healthcare facilities and communities, as well as personal protective equipment. In addition, we have seconded senior leaders to assist with the Business for South Africa initiative, which was set up, to help mitigate the health, labor, market and economic impacts of COVID-19 on South Africa. These are just a few of the interventions Sasol has implemented.

Turning now to our operational performance; our first half performance was satisfactory. However, in our second half, we faced unprecedented challenges. Despite this, mining improved production by 2%. The impact of COVID-19 on our operations was limited in the second half of the year, and is testament to our COVID-19 mitigation measures in operations, as well as productivity gains.

Our Secunda synfuels operations experienced an 8% decline in production, while Natref decreased by 34% due to the drop in fuels demand in South Africa. This was precipitated by the national lockdown that commenced in late March. As a result, we suspended operations at Natref for over two months, while synfuels was reduced to 75% throughput for just short of two months. However, our decisive action enabled us to also take advantage of some opportunities. We were able to accelerate maintenance both at synfuels and Natref, to allow continuous operations in the current financial year. Our unique process at Secunda enabled us to swing production, prioritizing chemicals in response the lower fuels demand. At our North American Operations, our production volumes were nearly a third higher, as the cracker achieved nameplate capacity, and is currently producing at maximum run rates. Our HDPE joint venture continues to produce above expectations. At our Eurasian Operations, production was marginally down by 2%, but was partially offset by the increase in surfactant demand.

Looking at the LCCP now, I'm pleased to report the excellent safety performance of the project, with a Recordable Case Rate of 0.11 and zero lost work day cases. Construction is now complete, while restoration work to the LDPE unit is nearing completion and is expected to be online in October this year. The majority of the LCCP's capacity is now operational. LLDPE is producing at nameplate capacity, while the ethylene oxide value chain has reached-targeted production levels. We recently announced the beneficial operation of our Ziegler and Guerbet units, where product trials are now under way. Our agile marketing strategy is in place and we have been successful in placing all products. Capital expenditure to date, is still within guidance, and is tracking at $12.8 billion. Despite the impact of lower product prices, a positive EBITDA was realized in the second half of the year, compared to a loss in the first half.

The fall out in the oil markets led to a 37% drop in the price of Brent crude in the second half of the year. The past several months have seen considerable volatility in the oil price. However, it has now stabilized around the $4 per barrel mark. Equally significant to our business is the rand/dollar exchange rate, as most of our revenue is dollar denominated. In the period, the rand weakened against the dollar by 13%. Polyethylene prices declined by 15% to $760 per ton, from nearly $900 in our first half, with a similar downward trend seen across also our other base chemical basket prices.

Let me briefly summarize our financial performance, which Paul will elaborate on shortly. Our cash fixed costs remained flat, which is remarkable in a year where costs were still ramping up in support of new assets. We also improved working capital, and reduced our capital spend through focused management actions. With a revised long term outlook on our price assumptions, we have booked ZAR112 billion in impairments. This reflects the current depressed macro environment, with a softer outlook on price recovery, including the impact of fair value adjustments at LCCP, given the announced partnering discussions. We have also managed to maintain liquidity in very challenging times at $2.5 billion, which is higher than expected. Furthermore, we still delivered on our commitments toward sustainable transformation and broad-based black economic empowerment, with expenditure with black-owned suppliers, now at ZAR26 billion for the financial year 2020.

Turning now to our expanded asset divestment program to streamlining our portfolio, which is in line with our strategy. This program has yielded good interest in relation to a number of our assets, despite macro environment uncertainty. We progressed transaction to realize approximately $600 million and most recently, we entered into exclusive negotiations with Air Liquide for the sale of 16 air separation units located in Secunda. We hope to have the final terms of that transaction agreed soon. The transaction to sell a 51% share in the explosive business to Enaex has been concluded. In July this year, Enaex Africa officially started operating in SouthAfrica. I am pleased to confirm that all jobs have been retained. We also concluded an agreement to sell our indirect beneficial interest in the Escravos GTL plant in Nigeria to Chevron. In terms of the partnering discussions at our U.S. Base Chemicals assets, the process is well advanced, so I hope that we can provide a more detailed update in the near term. The divestment process with respect to our interests in ROMPCO, and the CTRG, as well as other assets, are also well advanced. We are pleased with the overall progress made to date and we are clearly in a time of great uncertainty. However, we have been clear that every transaction must help us deliver on both our strategic and financial objectives. I believe we are on track to deliver with our March 2020 objective of beyond $2 billion. We aim to improve the bottom end of target significantly by the end of financial year '21.

The pathway to a deleveraged balance sheet is on track, and is underpinned by the progress made on our self-help initiatives and our asset divestment program. In addition, we progressed our Sasol 2.0 initiative to support the reset of the organization, to be sustainably profitable in a low oil price environment. For financial year '21, we will continue to execute against our response plan objectives, to keep liquidity strong, and bring our leverage down. We are in process of defining the targets for Future Sasol, together with a clear implementation plan to deliver that. We will share more of the detail in an Investor Update in November this year.

The final major step on our deleveraging pathway, is a rights issue. We want to implement this, when the amount required is well defined and when we can go to do so on the basis of a clearer and stronger financial position. On that basis, Sasol is currently preparing to execute a rights issue, and that is for the second half of financial year 2021.

The coming months will be tough for team Sasol. We are tackling our short term challenges head-on to ensure, Sasol's long term sustainability. A process of renewal does not come without difficult decisions. However, our priority is to focus on our commitments, as we deliver a sustainable Future Sasol.

I will now hand over to Paul.

Paul Victor -- Executive Director and Chief Financial Officer

Thank you Fleetwood. Good morning ladies and gentlemen. Today, we outline a set of results that were delivered during a volatile and challenging macroeconomic environment. The oil price collapse and COVID-19 crisis came at a time, when our balance sheet was already at peak gearing. This placed a significant strain on our liquidity position. Our results were severely impacted by a 40% decrease in Brent crude oil and product prices. While oil prices have since recovered to about $40 to the barrel, the outlook continues to indicate a much lower for longer oil price environment. This resulted in significant impairments, totaling almost ZAR112 billion.

Since March 2020, we took immediate steps to implement a comprehensive response plan to stabilize the business in the short term and targeting to raise up to $6 billion by the end of financial year '21 to repay debt. As Fleetwood mentioned, this is being achieved through a comprehensive and combination set of self-help measures, and expanded and accelerated asset divestment program, and a plan rights issue of up to $2 billion during the second half of financial year '21. I am pleased to report that we've exceeded our 2020 response plan target for self-help measures, conserving cash well in excess of $1 billion. This was delivered through focused management actions and establishing a cash war room, to continuously improve our liquidity position. We intensified our focus on cost containment and successfully managed to keep cash fixed costs flat in nominal terms for the year, at ZARR58 billion. This is despite a 10% increase in the first half of the year. We have again demonstrated the resilience and commitment of Team Sasol.

To create flexibility in our balance sheet, we successfully engage our lenders to waive our covenants at year end, as well as lifting the December 2020 covenant from three times to four times net debt-to-EBITDA. Protecting the balance sheet and meeting our debt covenants remains paramount during this time. The deleveraging of the balance sheet will be a gradual process and it's particularly important that during this phase, we focus on the controllable factors at our disposal. We are advancing our asset disposal program and delivered more than $1 billion of asset sales since its inception in November 2017. As we execute disposals, we will continue to safeguard long-term shareholder value, while aligning the portfolio with the company's long term strategy.

Let me now focus and highlight salient items from this set of results; adjusted EBITDA decreased by 27% or ZAR12.7 billion. This was, as I have mentioned, largely due to a 40% year-on-year decrease in oil and product prices, the demand destruction suffered by COVID-19 and, the LCCP sign-up losses incurred for the first half of the year '20. In this period of unprecedented volatility, we continued to focus on items within our control. As indicated earlier, we delivered a stellar cost and robust cash performance and reported a 14% increase in sales volumes in the Chemicals business, due to the ramp up of the LCCP. As such, the decrease in cash generated by operating activities, as indicated on the slide, was limited to 18% as a result of decisive cash, cost, working capital and capital management. Earnings were also negatively impacted by increased LCCP depreciation and interest charges, now charged to the income statement, as a result of the LCCP complex being operational. With all the LCCP units mostly on line, we do expect a much better revenue, cost and cash flow match for financial year '21.

Also indicated on the slide in front of you, core headline earnings per share was ZAR14.79 per share, down 61% compared to the previous period, mainly as a result of the reasons mentioned earlier. As mentioned earlier, earnings were also significantly impacted by impairments and write downs of ZAR112 billion.

Let me now turn to the segmental highlights, and they start on Mining. Our productivity decreased on an annual basis by 4%, after a disappointing operational performance in the first half. In the second half however, we have seen a more stable operating environment with a 2% improvement in productivity. We are very focused on sustainably improving our operational performance and driving down the unit cost, as it is negatively impacting our operating margins.

Let's move to the middle part of the slide, and focus on E&PI. E&PI delivered a very consistent operational performance, with a significant increase in EBIT, compared to the prior year. Our Mozambican assets delivered a very solid EBIT of ZAR1.5 billion, despite lower demand and pricing. Post the easing of lockdowns in South Africa, we have seen an increase in demand and therefore, earnings should resume to pre-COVID levels this financial year.

Let's now turn to the right hand side of the slide, and focusing on Energy; this business was faced with unprecedented challenges, as fuel sales dropped 12% due to COVID-19 lockdown measures imposed in South Africa. In the last quarter, petrol demand fell by almost 80%, and jet fuel decreased by nearly 100%. As a result, our adjusted EBITDA fell by 50% to ZAR11.4 billion, based on lower margins and operational cutbacks, compared to the prior year and as Fleetwood explained. Earnings were further impacted by impairments of ZAR12.4 billion, mainly due to the lower oil price outlook and weaker refining margins in the short term. Cash costs and working capital levels were also very well managed in this business.

Let's now turn to the bottom end of the slide, and focusing on Performance Chemicals. The PC business delivered a solid performance during the second half of the year, with 8% higher volumes compared to the prior year, as the LCCP's EO/EG plant continues to produce according to plan. This benefit was partially offset by lower demand, in certain markets due to COVID-19 and the impact of impairments. Despite the macroeconomic headwinds, our Advanced Materials portfolio margins remained robust during the period. On the other hand, our organics portfolio was negatively impacted by lower oleo-chemicals pricing. In addition, the PC results were negatively impacted by the ZAR2.6 billion of start-up losses at LCCP, which is very much expected to improve in financial year '21, as the plant generates positive EBITDA. Most of the start-up losses that I have mentioned though, were also recorded during the first half of financial '20.

Similar to PC, Base Chemicals faced headwinds negatively affecting our dollar basket of sales prices. Total sales volumes increased by 19% compared to the previous year, as the LCCP units continue to produce as planned. Our U.S. polymer sales volumes were more than double, compared to the prior year. The business reported a remarkable improvement in adjusted EBITDA, as depicted on the slide in the second half of the year, with profitability increasing from ZAR1.6 billion in the first half to ZAR5.2 billion in the second half. The softening of international chemical prices however, resulted in impairments of ZAR71 billion. ZAR18 billion related to our foundation businesses in Southern Africa and the U.S., while ZAR53 billion related to the fair value impact, as a result of the partnering discussions of our Base Chemicals assets in the U.S., and as Fleetwood mentioned before. The disposal process is far advanced and further announcements will follow in due course.

Profitability was further impacted by ZAR2.3 billion of start-up losses for this business unit, as a result of the LCCP. The performance is expected to improve as well for financial year '21, as most of these losses, as I have mentioned previously, were also recorded during the first half of financial year '20.

Lastly, at the bottom right hand side of the slide, our Group Functions segment was impacted by finance charges and unrealized hedging and translation losses of ZAR12.2 billion. As mentioned earlier, we are pleased to report that we exceeded our $1 billion 2020 self-help measure target and have well developed plans in place to deliver a further $1 billion for financial year '21. We maintained a strong focus on cash this year, and reported a free cash flow, excluding growth capital, of ZAR8.5 billion in the second half of the year compared to ZAR2.6 billion in the first half of the financial year. We have managed to maintain our cash inflection point reach in January 2020, despite significant cash flow challenges faced during the second half of financial year '20. As mentioned earlier, we are making very good progress on our asset disposal program and are well advanced with the disposal of more assets. Further announcements will be made in due course.

During this process, we remain committed to sell assets at the best value. Given these efforts, we still hold the view that the rights issue of up to $2 billion is needed to sustainably reset the capital structure of the company. Before making a final decision on the size of the rights issued during the second half of financial year '21, the Sasol Board will consider the progress made with regards to the asset disposal program, the impact of the current improved macroeconomics on our business, as well as the progress made with the implementation of 2.0.

We are also pleased with the improvements made to stabilize and improve our liquidity position throughout the various self-help measures. We currently have a liquidity buffer of over $2.5 billion to allow us to withstand further macro volatility. Our liquidity buffer is now at the upper end of the market guided range. We will continue with our fit for purpose hedging program, to shield the balance sheet against market exposures We've also implemented a cash war room, to monitor and improve our liquidity, in order to serve current and future debt commitments. Over a relative short period of time, significant cash savings were achieved.

As a management team, we do remain committed to the task at hand, to continue managing the balance sheet to lower gearing levels. Our plans to deliver an additional $1 billion in cash savings and accelerate our asset disposal program, are in support of our commitment to reduce debt by up to $6 billion by end of financial year '21. We accept that a rights issue will be needed in the future, but we are committed to optimize the size of the offer, as mentioned by Fleetwood earlier.

Looking beyond our short-term measures, we have agreed the framework for future Sasol, which will be used to position the company for sustained profitability, in a low oil price environment. More details will be shared at our planned Investor Update later this year.

Our capital expenditure for the year amounted to ZAR35 billion, of which ZAR14 billion or $0.9 billion related to the LCCP. Our capital expenditure forecast of ZAR21 billion for financial year '21 is sufficient to sustain the foundation business. Sufficient sustenance and environmental capital is allocated to ensure our operations and asset health is not compromised, and that we pursue our long-term sustainability efforts to realize a 10% improvement in our absolute CO2 footprint by 2030. We remain committed to environmental compliance, and as such, we are reviewing the roadmap and timing of spend to align with our response plan. Discretionary growth capital specifically for financial year '21, will mostly be limited in support of our deleveraging objectives. We remain committed to our overall capital allocation framework, as we navigate our peak gearing phase. We will provide guidance on our capital expenditure for financial year 2022, at our investor interaction, to align with the targets for future Sasol. Financial year '21 remains a critical period for Sasol. The impact of the COVID-19 pandemic and macroeconomic swings are expected to continue and may have a further impact on our market guidance.

Within this context, we expect the following outlook for financial year '21 delivery from our assets and also indicated on the slide in front of you. Mining to ramp-up to targeted production levels, as we focus on safety and efficiency. We expect a normalized unit cost of ZAR340 to ZAR360 a ton. South African liquid fuels sales volumes are expected to range between 54 million and 55 million barrels. Secunda Synfuels Operations forecast to achieve production volumes of between 7.7 million and 7.8 million tons. An ORYX average utilization rate of between 75% and 80%, as train 2 resumes operations in the second quarter of financial year 2021. Performance Chemicals' sales volumes is expected to increase by 3% to 5%, excluding the LCCP, volumes are expected to be flat and average U.S. dollar margins will trend in line with the global macroeconomic outlook.

Base Chemicals' sales volumes are expected to increase between 3% to 5%, and excluding LCCP we expect an increase of between 1% to 2%. U.S. dollar basket prices are also expected to remain soft, given the potential future impact of COVID-19. We are also targeting to reduce our balance sheet debt, as mentioned earlier, by up to $6 billion by the end of financial year 2021. Normalized cash fixed costs are also expected to track inflation. We forecast the average rand/U.S. dollar exchange rate to range between ZAR16 and ZAR17; and average Brent crude oil prices to remain between $35 and $45 to the barrel. Through our comprehensive response plan and focused management actions, we expect to manage the net-debt-to-EBITDA to below covenant levels.

In conclusion, we continue to face significant challenges as a business and with our focus on the key actions required at this time, I am confident that we can steer the ship through this very difficult time going forward.

And on that note, I will hand back to Fleetwood.

Fleetwood Grobler -- President and Chief Executive Officer

Thank you Paul. I would now like to share more detail on Future Sasol. Despite the challenges we've mentioned today, we cannot lose sight of the longer term, for which we need to build a resilient company, that will be sustainably profitable in a low oil price environment. This will allow Sasol to deliver better for all its stakeholders, including taking an important role in South Africa's transition to a lower carbon economy. We are very conscious that the company has been through a period of high capital spend, and our strategy will therefore have a greater focus on enhanced cash generation, and value realization for shareholders.

What does the future Sasol look like? Future Sasol is streamlined, its focused and positioned to succeed. Sasol will be an attractive investment, by delivering good returns which are underpinned by low costs, high margins, strong capital discipline and business sustainability. And our business portfolios are distinct and customer-centric. They participate in select global markets to drive value-based growth. They are responsible for their own profit and loss, supported by a leaner and more fit-for-purpose centre that provides strategic boundaries, allocates capital and enables the business units. A simple and more agile organization, where people are energized and enabled to realize their full potential. Simplicity means that the businesses are empowered to make their own decisions, which are market, and profit-focused.

Our strong technical, engineering and marketing capabilities, together with efficiencies realized through digitalization will enable Sasol to deliver better solutions to our customers, through our unique chemistry and technologies.

Lastly, delivering on triple bottom line outcomes will see us enhance our employee value proposition, foster stronger relationships with our stakeholders and return value to shareholders. Advancing our sustainability journey remains key for our long term aspirations. Against this backdrop, it is important to state that Sasol remains proud of its heritage. The company will continue to play an important role in the energy transition and economic development of South Africa. Partnering and collaboration will also be very important in future Sasol.

As a first step toward repositioning the business, we reviewed and updated our strategy to bring focus to two distinct and core businesses; Chemicals and Energy, where we currently have strong market positions and capabilities. For Chemicals, we will transform our portfolio toward specialty chemicals over time, where we are confident that our differentiated capabilities, and strong market positions will earn us the right to grow this segment. Our Base Chemicals portfolio will remain a focus area, especially for the South African integrated value chain. Overall capital allocation in the Chemicals will be biased toward specialty chemicals.

The Energy portfolio will consist of the entire Southern African value chain. The key focus area for this business, will be to improve cash generation. This will be achieved through cost efficiencies, higher margins and advancing our greenhouse gas emission reduction plan and air quality goals. As a result, a key decision was made to stop all oil-based growth opportunities in West Africa, and resize our upstream portfolio to focus on gas in Southern Africa. In addition, no new investment in coal reserves will be made, which is in line with our plans to reduce carbon emissions. We will continue to focus on gas as a key complementary feedstock, and progress growth of a Southern African gas delivery system, as well as renewables, as a secondary energy source. In both of these areas, we see Sasol playing an important role, in helping the country manage the energy transition. I must reiterate that our capital allocation principles will remain intact to support the execution of this strategy, in line with our strategic reset, mitigating our climate risk is a cornerstone of our strategy, as we transition to a more sustainable company. As mentioned earlier, portfolio choices have been made, which enable our Green House Gas reduction ambitions and our longer term sustainability aspirations.

Coinciding with our 70th anniversary, we are proud to provide a glimpse of our 2030 emission reduction roadmap, focusing on our Southern African energy value chain. The detailed roadmap will officially be launched later this month. The roadmap informs the path to achieve our committed minimum of 10% reduction in greenhouse gases by 2030, off our 2017 baseline. Our roadmap places us on a trajectory for greater reductions post 2030, and positions us to support the country's energy transition. Our 2030 roadmap, sees us moving toward being less carbon-intensive. Various technology options have been reviewed, ranging from hydrogen to carbon capture and utilization, for which evaluation is being progressed at speed. In line with our ambition to introduce renewables, we are developing two 10 megawatt solar facilities for our South African operations, as a first step to realizing our ambitions of at least 600 megawatts of renewable power by 2030.

Our roadmap is split into two phases; reducing our emissions to 2024, by improving process and energy efficiency, and introducing renewable energy to reduce our Scope 2 emissions. Thereafter, transforming our operations by positioning to accept more gas as complementary feedstock, subject to gas availability and affordability. We are collaborating closely with all our stakeholders to define our long term 2050 ambitions and associated emission reduction roadmap, which will be shared at our capital markets day in 2021.

The successful delivery of Future Sasol will be a challenging journey. I will highlight a few key deliverables required to achieve this. Changes to the financial reporting format, aligned to the revised operating model, will be effective from the end of financial year '21. The optimization of structures commenced in June, and will continue in a phased approach, starting with senior leadership this month. Consultations with the relevant stakeholders are in progress relating to this optimization.

To be sustainable in a low oil price environment, we needed to review our global cost competitiveness. We have embarked on benchmarking exercises and diagnostic reviews of our current businesses. This is to identify the gaps and to define the optimal end state. To realize this, we will set targets to help increase free cash flow and enhance return on invested capital, and ultimately be an attractive investment to shareholders. Efficiencies across a range of metrics are being considered. These include, gross margin improvements, cash cost reduction, predictive maintenance strategies, and fit-for-purpose shared services. We will communicate more of the detail regarding our Future Sasol targets at our investor update by November this year.

Let me conclude with a few general points. The past year has been a very challenging period for Sasol and our people. But even as I say that, I believe we can look back with some satisfaction on what has been achieved during this period. First, in relation to LCCP, since resetting the schedule and cost in 2019, we have delivered against our revised targets.

Second, we have delivered on the self-help measures announced in March 2020, in response to the crisis precipitated by the COVID-19 pandemic. And thirdly, through Future Sasol, we are resetting in a way, which allows Sasol to be a profitable, sustainable and resilient business in a low oil price environment. I believe, this is a credible record of delivery through a challenging period, which should instill confidence, as we move into the next phase of delivery. In the short term, we remain focused on the delivering of our actions to stabilize the business and creating a clear pathway to a deleveraged balance sheet. We will implement a sensible capital structure, to support our strategy, and ensure resilience against further market volatility. Also a robust capital allocation framework to balance portfolio returns is key for Sasol to remain resilient. Alongside this, our priority will be to continue to take all steps to ensure we are ready to go live with Future Sasol later in this year.

It is a time of renewal for Sasol and along with all the challenges that this brings with, it is also about the excitement of new possibilities. Sasol has a proud history of 70 years, and I am confident, we have the people the strategy, and above all the will to succeed in a lower carbon world.

On behalf of the executive management team, I would like to extend our sincere appreciation to our people around the world for their significant efforts and to our stakeholders for their support in these trying times. Many thanks for taking the time to listen to our presentation today.

Questions and Answers:

Duration: 44 minutes

Call participants:

Fleetwood Grobler -- President and Chief Executive Officer

Paul Victor -- Executive Director and Chief Financial Officer

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