(2015-06-09) Sasol’s CEO, David Constable will not renew his , and will instead transition into an advisory role in July 2016.
In the four years since his arrival, Constable has shaken the company up in two notable ways. He has forced greater efficiency with stricter focus on cost and better use of capital. In addition he has significantly expanded the company’s ambitions by embarking on a number of mega-projects designed to diversify its earnings stream, notably in Louisiana in the United States and South Africa/Mozambique.
By staying on as an advisor to Sasol in the 2017 financial year, Constable is trying to reassure investors that there will be continuity as Sasol moves ahead with its biggest investment ever.
‘When David was appointed in 2011, he prioritised a reduction in organisational complexity and drove an ambitious growth programme. Coupled with global socio-economic challenges, we required a leader with a long-term view to ensure the Company’s sustained competitive advantage,’ Dr Mandla Gantsho, Sasol’s chairman, said in a statement on Monday.
Some would argue that this is not the continuity they had envisaged. “This is not usual – the announcement comes as a bit of surprise,” says Adrian Saville CIO Cannon Asset Managers. “As much as companies want government policies to exhibit consistency and continuity, the same can be said of shareholders in the case of company executives.”
Also, he adds, “it is concerning that David Constable’s departure coincides with the implementation of Sasol’s largest investment ever – this is not ideal and cause for concern.”
In January lower oil prices prompted Sasol to delay the final investment decision on its proposed gas-to-liquids plant in Louisiana. This project accounted for the bulk of Sasol’s planned historic $22 billion chemical complex. However it is going ahead with the $8.1 billion ethane cracker in the Westlake complex.
At the same time Constable announced a raft of cash saving measures that will be implemented over the next two years. These will be over and above the savings from the business performance enhancement programme which targeted R4 billion in annual savings by 2016.
For shareholders however, Constable’s most significant decision would have been to curtail the company’s progressive dividend policy, as a result of the fall in the oil price and the investment requirements the company faces.
Sasol’s board has begun the process of identifying suitable candidates for the job.
For his part, Constable has not disclosed reasons for his decision. “Looking back, I could never have imagined that my time at Sasol would pass so quickly and be filled with so many exciting milestones,” he said in the written statement. “It has been an extraordinary experience working with a supportive board, a dedicated management team, and committed colleagues and partners. I am very proud of the progress we have made together towards our goal of ensuring Sasol’s long-term sustainability and success. As I close out the final twelve months of my tenure, I look forward to driving the Company’s 2016 financial year priorities, as we embed the group-wide change programme we embarked upon four years ago.”
Saville remains unconvinced. “Sasol needs to do more than furnish the market with a glossy announcement.”
Source: Money Web
Photo: David Constable, Sasol CEO
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