Sasol Ltd (SSL) 2022 Q2 法說會逐字稿

Welcome to this presentation of Sasol Limited's financial results for the 6 months to end December 2021. These results are presented by Fleetwood Grobler, Sasol's President and Chief Executive Officer; and Paul Victor, Sasol's Chief Financial Officer.

For your awareness, please note the safe harbor provision regarding forward-looking statements and definitions as it relates to the content of this presentation. Sasol's President and CEO, Fleetwood Grobler will now address you.

Good day, and welcome to our financial results presentation. The past 2 years have seen businesses faced with significant social, business and macroeconomic challenges as a result of the global COVID-19 pandemic. Despite the current uncertainty playing out, there are clear signs of recovery to pre-pandemic levels. Sasol has benefited from this recovery. And our first half financial performance has been underpinned by a favorable macroeconomic environment with higher product prices and stronger demand. These factors resulted in a notable gross margin improvement from the prior half year combined with strong cost and capital expenditure performance. These benefits were, however, partly offset by operational challenges in our South African value chains which resulted in lower production.

For the past 6 months, there are 4 key business priorities we have progressed. I will start with safety. We are deeply saddened by the 5 workplace fatalities, which occurred during the reporting period. Let me again express our heartfelt condolences to the families of [Themba Masilela], [Moses Hlongoane], [Takalani Masha], [Gansen Naidoo] and [Lebogang Lebepe]. Any loss of life is unacceptable, and we are gravely concerned by the deterioration in our safety performance, especially given the significant improvement we recorded last year.

We are redoubling our efforts with focused interventions. Safety is our top priority, and we are fully committed to turning the tide to ensure our people return home to their families unharmed at the end of each day.

On operational excellence, we defined Sasol 2.0, reset our operating model and delivered a strong ramp-up in our U.S. specialty chemicals. The lower production from our South African operations during the period has been disappointing. Our focus here is to continue delivering our Sasol 2.0 objectives, instituting sustainable competitive improvements and across our value chains, by the end of financial year 2025. However, in the short-term, we are prioritizing the business recovery of our South African operations. Our commitment to manage our cost competitiveness of our SA integrated value chain, cash breakeven level to be between USD 30 and USD 35 per barrel throughout this period stands.

Looking at ESG, our climate change strategy is in place with confirmed medium and long-term targets, which have defined plans to accelerate the decarbonization of our business. We have also announced and are progressing several partnerships to realize our ambitions. Our focus is to continue progressing this shift to incremental natural gas as a transition feedstock for our SA value chain as well as advancing sustainable aviation fuel, green hydrogen and renewable energy opportunities.

The fourth priority, shareholder value delivery has seen as continue to progress our balance sheet reset and refine our capital allocation framework. Our focus here is to restore the dividend as soon as we are confident that we can do so on a sustainable basis while concluding the few remaining asset divestments still awaiting regulatory approvals.

We are working hard to embed safety and operational discipline as the foundation in Sasol, so that we provide an enduringly safe working environment for all our people. Following our recent tragic fatality incidents, we have identified additional leadership focus areas which are receiving our highest priority to augment our existing, high severity incident program and to create an enabling environment for risk ownership, operational discipline and care and best-in-class assurance systems for our operating environments.

Among leaders, our focus is to install a work environment where a high level of order, care and empathy prevails with consistent enforcement of health and safety measures combined with appropriate consequence management.

Active leadership involvement in the risk management process is key. This includes risk identification and the management thereof confirming the competency levels of task executors and first-line supervision before the execution of high-risk tasks. These measures demonstrate that we are certainly placing greater emphasis on a dedicated leader champion safety culture. Alongside this, our people must fully engage and comply with all safety rules and procedures to speak up, report and stop unsafe work immediately if that is required. We are also continuing to institutionalize learnings from previous incidents to embed the lessons in all our operations.

Sasol delivered a mixed set of results for the 6 months ended 31 December 2021, benefiting from favorable macroeconomic environment and increased demand following the easing of COVID-19 lockdown restrictions globally. However, this was offset by the operational challenges faced at our SA operations where coal quality and supply were constrained and resulted in lower fuels and chemicals production.

In our energy business, external sales revenue was 47% higher in rand terms due to the higher crude oil, refining margins and demand. Mining productivity was 16% lower than the prior period due to the safety incidents, higher-than-expected rainfall and slower-than-expected ramp-up of the full calendar operations, integrated shift system or Fulco.

The consequence of the reduced coal feed together with a delayed shutdown and operational instabilities resulted in lower production volumes at our Secunda operations. We have put in place comprehensive short and medium and long-term plans to address performance challenges and we are increasing coal purchases to restore the stockpile to target levels.

In Mozambique, gas production was 1% higher than our plan, but 4% lower than the prior period due to the start of the well drilling program in August 2021.

Looking at the Chemicals business, external sales revenue across the Chemicals portfolio increased 21% in rand terms. Chemicals Africa sales volumes were 15% lower than the prior period, largely due to the lower production at both Secunda and Sasolburg sites.

Sales volumes for our Specialty Chemical business divisions were approximately 60% higher than the prior period due to the continued sales ramp-up and Hurricane Laura, which has impacted volumes in the prior period. In the U.S., we successfully completed the largest ethylene East Cracker turnaround at Lake Charles. The turnaround is calibrating best-in-class performance with an 8 to 12-year turnaround frequency. Across all our operations, we are maintaining our commitment to protect asset integrity.

I will now move more and provide more clarity on our recovery plan for South African operations. Earlier, I spoke of our heightened safety focus. In addition, our leaders are spending more time on site, given the importance of leadership visibility to driving an environment of excellence in safety performance and operational discipline. We are also progressing the full realization of Fulco's benefit through program level interventions, which is further bolstered through HR processes and training initiatives. We are also focusing strongly on initiatives to address coal quality and supply in our SA value chain, leading up to June 2022 through a combination of initiatives to increase our own production and productivity as well as higher coal purchases and stockpile levels. As at Friday, 18 February, our coal stockpile was just under 1.1 million tonnes, and we are well on track to meet our target at the end of this month.

Higher external coal purchases to replenish the stockpile will continue until the baseline is restored. These purchases are tracking our plans with procurement processes well in hand. Our Secunda operations is also on track to achieve the revised target with operational issues largely resolved. While the recovery continues, gas loads to Secunda operations will be optimized to protect value chain beneficiation.

In line with the Secunda operations recovery plan, we are stepping up production for Chemicals Africa. Furthermore, we are bolstering the executive leadership team with the appointment of Riaan Rademan as Executive Vice President of Mining effective 9 March 2022. This will help stabilize our mining business and advance the recovery plans. Riaan is, of course, no stranger to Sasol and in particular, our mining business, where he served as MD and later on the Sasol's Group Executive Committee from 2009 and to 2017, during which we had executive accountability for a range of key areas, including supply chain, mining and exploration and production. Riaan rejoins Sasol from Foskor where he led a successful turnaround program as its President and CEO since 2019.

Secondly, as Bernard Klingenberg, near his retirement later this year, we had to identify a suitable successor with a relevant operational experience to take over the complex operations portfolio. An internal candidate was identified, and I am delighted to announce that Simon Baloyi will be appointed as the EVP Energy operations effective 1 April 2022.

Simon is currently employed as the Senior Vice President of Regional Operations and Asset Services at Sasol. Prior to this, he was the Senior Vice President of Secunda Chemicals operations. And he has an illustrious career spanning over 20 years with Sasol, having managed several divisions within Sasol operations and he has excellent experience across the value chain.

I take this opportunity to thank Bernard for his tenure over several decades at Sasol, spanning many functional business and operational roles. We will pay tribute to him nearer to the date of his retirement.

Looking at our financial highlights over the period, we experienced a strong recovery that delivered profitability and balance sheet strengthening. Paul will deal with the financials in greater detail. So I will touch on only a few of the salient numbers.

Adjusted EBITDA increased by 71% in from ZAR [18.6 billion] in prior period to ZAR [31.8 billion] currently. Cash fixed costs excluding one-offs, inflation, translation effects and [STI] accruals increased by 2% compared to the prior period. However, we are still in line with our full year guidance of approximately ZAR 58 billion to ZAR 59 billion. The increase in costs relates to higher spend on maintenance and labor which Paul will cover in more detail later.

Capital expenditure of ZAR 10.4 billion compared to ZAR 7.5 billion in the prior period is in line with our ZAR 20 million to ZAR 25 billion target. Balance sheet strengthening continues with a net debt-to-EBITDA of 1.3x reached. Our working capital ratio of 15.8% compared to the 14.9% for the prior period is slightly higher than our guidance, mainly as a result of the higher value of inventory following increased prices. And on free cash flow, we have seen a more than 100% improvement.

A management review was commissioned after our communication in December 2021 on the downward revision of our energy business volume forecast. A reportable [irregularity] was raised by our auditors, PwC. And subsequently, they concluded that the necessary remediation actions have been taken by the company. Please note that the ROI had no impact on our financial results for the half year reporting period.

We introduced the Sasol 2.0 transformation program to enable the business to be competitive, highly cash-generative and able to deliver attractive returns even in a low oil price environment. This program commenced in 2021, together with the introduction of a new operating model consisting of a global chemicals business and a Southern Africa Energy business supported by a lean corporate center. Notwithstanding the current operational challenges, which we are addressing as a key priority to restore the stability of our business, we remain committed to the delivery of our Sasol 2.0 targets.

The current underperformance at our mining and Secunda operations is being managed separately from the Sasol 2.0 program. And as I shared earlier, a business recovery intervention is underway to return our production to baseline performance. This may require that Sasol 2.0 interim targets be phased and reprioritized to allow for higher value baseline recovery in 2022 and 2023. However, 2025 targets remain intact.

To this end, plans are evaluated on an ongoing basis and results monitored by management. We are tracking the Sasol 2.0 commitments in parallel and ensuring that the initiative funnel remains robust.

The commitments for 2022 delivery towards the above targets are cash fixed cost reduction of up to ZAR 3 billion, gross margin improvement of up to ZAR 1.5 billion, maintain and transform capital spend within the range of ZAR 20 billion to ZAR 25 billion and net working capital to revenue of 14%, approximately ZAR 1.8 billion of cash fixed cost savings and gross margin improvement to the value of ZAR 0.5 billion were realized for this reporting period.

The required run rate to meet the cash fixed cost target for 2022 is well on track. However, the gross margin is below the required run rate, predominantly as a result of operational challenges impacting our South African value chain.

Current indications are that maintain and transform capital expenditure will not exceed the range of ZAR 20 billion to ZAR 25 billion annual target we had for 2022. Management will monitor under expenditure on capital closely to ensure that safety, environmental compliance, commitments as well as asset integrity are not compromised. The working capital to turnover ratio is at 15.8%, and that is higher than the target of 14%, mainly as a result of higher valuation of inventory. However, we also considered the impact on customers, market conditions and profitability and executed risk-based decisions to optimize cash flow. Notwithstanding these, working capital improvement by year-end will be further pursued.

For 2022, the Sasol 2.0 program prioritizes 2 focus areas, namely strengthening of the initiative funnel and maturing initiatives. We have seen a strong set of initiatives come to the fall and good progress has been made to date with a focus now shifting towards execution and delivery on a sustainable basis. Sustainable benefits expected from Sasol 2.0 initiatives will be tracked and embedded.

At our Capital Markets Day in September 2021, we announced our plans to deliver on future Sasol. These included that we would not invest in any new coal reserves in the future and use gas as a transition feedstock, which has an inherent but significantly lower greenhouse gas footprint than coal.

We also confirmed that we would integrate renewables into our operations to reduce our electricity generation emissions, build new sustainable businesses, leveraging our advantage Fischer-Tropsch technology through our new Sasol ecoFT business and develop tailored solutions for our chemicals customers by helping them address sustainability challenges and providing specialty solutions while playing a leading role in the development of the green hydrogen economy in South Africa.

Against these commitments, I am pleased to report the following progress. On large-scale renewables, we are jointly executing 600-megawatt renewables, together with Air Liquide for Secunda operations and have completed our request for proposal process. Negotiations on the power purchase agreements are now in progress with 200-megawatt prioritized from 2023 onwards. We are also making good progress on the smaller scale with 10-megawatt renewable plants in Sasolburg and Secunda and are adding approximately 60 megawatts of additional renewable capacity in Sasolburg in support of our shorter-term plan to produce green hydrogen.

The RFP for the additional 60-megawatt was initiated last year, and we are now in process of selecting a bidder. In Brunsbuttel, Germany, Sasol Chemicals has been obtaining 100% of its external electricity supply from renewable resources since 1 January 2022. On gas, we have recently approved development funds for the first tranche of additional gas reforming capacity in Secunda to progress towards our 2030 GHG reduction target. Furthermore, our production sharing agreement project in Mozambique is performing to plan with a gas offtaker, CTT achieving financial close in December 2021.

A significant lever for decarbonization is the switchover to more natural gas feedstock towards 2030 and to reduce our dependency on coal. We are also making good progress on purchasing of 40 to 60 petajoules of LNG. We have received a draft term sheet and negotiations are underway to enable first gas by 2026.

Looking at green hydrogen in Southern Africa, we are exploring a number of green hydrogen coastal belt development opportunities, which are gaining momentum as we speak. We are leading the pre-feasibility study for the Boegoebaai green hydrogen development project on the West Coast of SA, which is a strategic project initiated by the South African government in support of the country's transition towards a lower carbon future. Here, pre-feasibility has commenced with a strong pipeline of potential partners. Sasol plans to produce the first commercial scale green hydrogen in Sasolburg using repurposed electrolyzers by late 2023.

On the FT sustainable solutions, our newly launched Sasol ecoFT business has made excellent progress in exploring sustainable aviation fuel and Power-to-X opportunities. Over 10 active new opportunities for SAF production are currently being evaluated with 2 project partnerships already established. We have also approved a corporate venture capital fund for the advancement of new technologies through start-up opportunities.

We recognize that in today's world, stakeholder engagement is about working collaboratively with constituencies to find solutions for more inclusive economies. As a global company with strong roots in South Africa, our promise to society is that we will seek to employ inclusive and sustainable business practices that enable development in the geographies and communities where we operate. To demonstrate our commitment to shared value, let me highlight a few examples from the past 6 months.

I will start with skills development. Our Sasol 2.0 transformation journey did result in a number of employees being unplaced. For these employees, we are extending our care offerings through a new entrepreneurial development program known as Ntsika. We are also augmenting internal capability development in preparation for our Future Sasol needs.

Looking at key partnerships. During the reporting period, we continued to formalize partnerships with a range of industry leaders to accelerate the transition to a low carbon economy. We progressed partnerships in gas development with a central energy fund, sustainable synthetic fuels and chemicals with Haldor Topsoe, renewable energy procurement with Air Liquide, green hydrogen with the likes of Imperial Logistics and the IDC and carbon offsets with Wonderbag. These are just a few examples highlighting our commitment to accelerate our decarbonization.

In the reporting period, we also signed a memorandum of agreement with the Northern Cape Development Agency to lead the pre-feasibility study to explore the potential of Boegoebaai as an export hub for green hydrogen and ammonia. Our vision to play a leading role in the development of South Africa's hydrogen economy is further evidenced by Sasol's Board representation on the CEO-led Global Hydrogen Council.

We remain a major investor in skills and socioeconomic development. Our global spend in these areas was around ZAR 1.1 billion for the 6 months reporting period. Through our focus and attention to infrastructure development and rehabilitation, we enhanced access to water and sanitation in our communities, including Mozambique.

To conclude on this area, let me touch on our work in the just transition space. We are cognizant that the energy transition is going to disrupt our industry. Shift value pools and impact the job market requiring diverse skills and capabilities in different geographies. It is critical that we anticipate and mitigate this change both within Sasol and at the country level to ensure adjust transition. Here, we are ramping up our just transition focus and developing a short to medium-term road map while defining and planning for the development of new skills and capabilities for ESG.

On that note, I will now hand over to Paul to take us through the detailed financial results.

Thank you, Fleetwood, and good day, ladies and gentlemen. Despite the operational challenges that we faced, I'm pleased to say that we still managed to convert a supportive macroeconomic environment into improved profitability. We achieved that with firm cost control, together with gains from the Sasol 2.0 transformation program and ongoing capital and cash discipline.

At the same time, we have a good early traction on repositioning the business for the transition to a low-carbon world. We believe that we have a strong foundation in place to deliver against the strategy that we announced at the Capital Markets Day last year.

A critical part of establishing a strong foundation pillar is us managing our balance sheet very prudently. We have succeeded in transforming this in the past 18 months with significant deleveraging results from asset divestments as well as improvements from our operating cash flows. Our asset divestment program is now nearing a close with the remaining transactions in the final stages of being concluded.

Although the balance sheet is in a much more stronger position, we still have some work to do and want to take the absolute net debt to below $4 billion while keeping the net debt-to-EBITDA levels to below 1.5x. We now have line of sight to achieving these metrics. And this will leave us well-positioned to deliver our strategy and to absorb any further macroeconomic volatility.

Completing the balance sheet is the leading financial priority for us. And that is why, although dividend resumption is important, we want to be certain that we are able to withstand macroeconomic volatility before dividend payments are resumed. It is on that basis and particularly with substantial macroeconomic volatility, very much still at play that the Board believes it is prudent not to declare dividend at this stage.

We will, of course, push hard to deliver the business results that fulfill our capital allocation principles to pay a dividend at the most earliest convenient opportunity. As I mentioned briefly, our Sasol 2.0 transformation program is very well underway to deliver against our financial year '25 targets. We will, however, need to do some reprioritization of the internal targets based on our current operational challenges in South Africa, which will impact the delivery against our financial year '22 full year targets.

Please allow me now to expand on the factors which impacted our results in more detail. The information that this slide reflects the comparative performance of half-one financial year '22 to the second half of financial year '21, which shows a continued strengthening of the key macroeconomic factors that are important to our business.

Oil prices continued to increase during the first half of the financial year. However, prices are expected to remain volatile for the remainder of the financial year based on supply-demand dynamics and increased geopolitical uncertainty.

The rand weakened against the dollar in this period, which improved profitability. However, at 12% weaker closing exchange rate at 31 December negatively impacted the translation of our U.S. dollar-denominated debt.

The global energy crisis saw ethane prices increased 48% over the past 6 months. Prices are expected to increase between USD 0.25 and USD 0.43 per gallon as new crackers ramp up their capacity and supply remains very tight. Polyethylene prices continue to increase on the back of stronger demand and tight supply.

Prices are expected to normalize between USD 1,300 and USD 1,500 per tonne as supply chain disruptions ease up and supply is restored. The current macroeconomic price levels will significantly contribute to benefit our profitability in second half financial year 2022, despite the operational challenges that we currently experience.

The financial results saw a notable improvement in our profitability for the group compared to the previous period, mainly benefiting from the stronger recovery in macros, which I did cover in the previous slide. These benefits were partly offset by the lower production in our South African operations. Despite this, we reported an increase in adjusted EBITDA of 71% compared to the prior financial year.

Our normalized real cash fixed cost increase by 2% compared to the prior year. This increase related to higher maintenance and labor costs as a result of operations instabilities experience in the South African value chain. This was partly offset by cost saving initiatives from our Sasol 2.0 program.

We still remain very much on track to deliver guidance for the full year of approximately ZAR 58 billion to ZAR 59 billion. Earnings were also enhanced by the impact of remeasurement items which included the profit on the disposal of our Canadian shale gas asset as well as the reversal of impairment relating to our chemical [workup] and (inaudible) alcohol value chain. This was partly offset by the increase in unrealized losses on the translation of monetary assets and liabilities and our hedging activities. This will be further unpacked in the slides to come.

Capital expenditure increased by 38% as a result of the planned Secunda operations phase shutdown in the current period and the planned U.S. East ethylene cracker turnaround.

Full year capital expenditure is still expected to be in line with the market guidance of ZAR 20 billion to ZAR 25 billion per annum. Core headline earnings of ZAR 22.52 per share was more than 100% higher compared to the previous period, mainly due to the impact of improved macros on our business. We are continuing to strengthen the free cash flow generating ability of our business, which will assist us to delever the balance sheet and restore dividends in the not-too-distant future.

I will now provide some detail on the business segments, starting now with our Energy business. Our mining business benefited greatly from higher export prices, which was partly offset by the slower ramp-up of Fulco and the higher coal purchases.

Turning to the gas segment, our Mozambiquan drilling campaign is progressing really well. However, adjusted EBITDA decreased by 22% compared to the prior year due to cash fixed costs resulting from the drilling campaign as well as the conclusion of the Gabon Oil and Canada shale gas asset divestments. This was partly offset by the increase in higher gas sales volumes as well as the significant increase in gas sales prices. Our fuel segment benefited from higher crude oil prices and refining margins, coupled with the increase in demand following the easing of the lockdown restrictions globally.

Adjusted EBITDA increased by more than 100% compared to the prior year. EBITDA contribution from ORYX GTL also increased by more than 100% compared to the previous year. The plant achieved an average utilization rate of 91% compared to 69% in the prior year that really related to the extended shutdown that we experienced in the previous year.

Turning to our Chemicals business. Chemicals Africa saw higher sales prices, offset by the lower sales volumes compared to the previous period. This was due to the lower production at both Secunda Synfuels as well as Sasolburg sites impacting all the business divisions in this segment. The average sales basket price was 37% higher due to a combination of improved demand, higher oil prices and the tightening of global supply conditions. This resulted in a 55% increase in the adjusted EBITDA. Earnings were enhanced by the reversal of the impairment of ZAR 1 billion previously referenced by myself. This was driven by higher sales price outlook on the back of a sustained increase in demand for alcohols into the personal hygiene market.

Chemicals America also benefited significantly from the higher sales prices with average sales price basket nearly doubled compared to the prior financial period. This was offset by slightly lower volumes following the divestment of our Base Chemicals asset in December 2020 and the LIP cracker downtime. This resulted in a very strong performance with adjusted EBITDA, again, increasing more than 100% to ZAR 3.8 billion for the first 6 months.

Lastly, Chemicals Eurasia benefited from higher sales volumes and higher prices. The increase in sales volumes was really driven by improved market demand, notably for our Essential Care Chemicals and Advanced Materials divisions.

Turning to the outlook for financial year '22. We are focusing all our efforts on [delivering], to plan and meeting our market guidance. The business recovery plan to our South African operations will be prioritized to ensure that we restore the energy and chemicals volumes. We expect the following from our energy business.

At mining, our productivity will be lower compared to the prior year due to the challenges that we have already mentioned to you, but we are very confident that we will meet our revised guidance for productivity and coal stockpile for the year-end at June 2022. We are focusing very strongly on the identified initiatives to address coal quality and supply for our operations in South Africa by continuing to purchase coal, to replenish the stockpile while we ramp up our own production to the desired levels as communicated. It still makes much more economic sense to upgrade a molecule of coal to a high-margin fuels and chemicals production rather than to turn down the production facility. We are currently assessing how long the recovery to the baseline volumes will take. And we do commit to updating the market in August 2022 after the completion of our internal budgeting process.

The Mozambiquan drilling campaign is on track. And as a result, we expect the gas production to be in line with our production guidance of 106 billion to 110 billion standard cubic feet.

Secunda operations will continue to be negatively impacted by the lower-than-expected coal quality and the supply for the remainder of the year. And taking these factors into account, we did adjust our financial year '22 production forecast to 6.7 million to 6.8 million tonnes.

We are confident that our operational recovery plans to restore volumes and margin will realize in due course. As a result, our South African liquid fuel sales volumes will range between 51 million and 53 million barrels due to the lower production from Secunda Synfuels operations during the first half of the year and the Eskom power outage, which we experienced in Sasolburg in January of 2022.

For our chemicals business, the sales volumes for the Chemicals Africa is also expected to be between 8% and 12% lower compared to the prior year with higher production now expected in the second half of the financial year as the recovery of our operations are experienced.

In Chemicals America, we expect sales volumes to be between 4% and 8% lower than the previous year due to lower ethylene production and a combination of production and market factors in Essential Care Chemicals and Performance Solutions. We are ramping up our Specialty Chemicals unit to maximize profitability of the site and expect sales volumes across this business division to continue to ramp up during the remainder of the financial year, supported by the planned higher production rates.

Chemicals Eurasia sales volumes are expected to be between 3% and 5% higher compared to the prior year, mainly due to improved market demand.

Our capital expenditure for the financial year up to 2025 remains according to our guidance of ZAR 20 billion to ZAR 25 billion per year. As a reminder, this includes both the sustenance capital needed to ensure safe and reliable operations across the business as well as investments required to meet our objectives to reduce emissions.

We will also consider small scale, high-return growth opportunities going forward, and this we did communicate to you before. Our spend for the last 6 months is actually slightly lower than our target, but we do remain committed to our overall capital allocation framework, and we'll continue to optimize the capital portfolio as we implement more Sasol 2.0 initiatives and achieve the desired outcomes.

I'm pleased to say that with the continued strengthening of the balance sheet as promised, we are very well on track to meet our financial year '22 targets. Our gearing has decreased to 59.1% compared to 61.5% as at 30 June 2021. And the net debt-to-EBITDA is now down to 1.3x with a net bank debt at USD 5.6 billion.

In terms of outlook, and as I've mentioned earlier, we will continue to prioritize the deleveraging of our balance sheet and reduce net debt levels, sustaining the net debt-to-EBITDA to be below 1.5x and the net debt to below USD 5 billion by the end of financial year 2022.

Our liquidity headroom of USD 5.7 billion is well in excess of our plans to maintain liquidity in excess of USD 1 billion. We plan to repay the outstanding debt on the commercial paper and the USD 1 billion bond in August 2022 and in November 2022, respectively, a very positive step in the right direction.

We continue to make good progress with our hedging of our foreign currency, crude oil and ethane exposures. We have been very successful in hedging our total exposure for financial year 2022, and we are making good progress in hedging our 2023 oil and currency exposure. This increase -- the certainty of future cash flows and mitigates downside risk to enable our future Sasol strategy execution.

We are reducing our hedge cover ratios for financial '23 as our balance sheet deleverages and have been very successful in securing hedges that protect the downside at approximately $63 to the barrel and allow upside participation to between $85 and $95 to the barrel.

With Sasol 2.0. We have seen a very strong set of initiatives come through to the full and good progress has been made to date with a focus now on shifting towards the execution and delivery on a sustainable basis.

Finally, again, as I've discussed earlier, we intend to resume the dividend payments as soon as we hit these targets with confidence in the outlook, and we are very well on track to achieve this. Further updates will be provided in August 2022 when the Board needs to assess the possibility of a final dividend payout. And on that positive note, I will now hand over to Fleetwood. Thank you very much.

Thank you, Paul. Central to Future Sasol all our plans to accelerate the decarbonization of our business. Our ambition in short, is to grow shared value while accelerating our transition. We have made great progress in the recent months. And in doing so, believe that we have the necessary firm foundations in place to move towards our future Sasol goals. In doing so, in the next 12 to 18 months, we are focused on delivering against our safety and operational recovery plans as well as progress in key strategic projects.

Let me briefly recap the 4 key business priorities I covered earlier. On safety, our aspiration is zero harm. We have focused interventions in place to realize our aspiration, as I shared earlier. On operational excellence, our SA value chain recovery is well underway, and we are ramping up the Lake Charles Chemicals complex. Our commitment to manage the cost competitiveness of our SA integrated value chain to a cash breakeven level to between USD 30 and USD 35 per barrel throughout the period stands.

On ESG, we are executing key projects to meet our targets with the intent of leading the development of the hydrogen economy in South Africa and meeting our 30% GHG emission reduction target through a mix of energy and process efficiencies, investments in renewables and a shift to incremental natural gas as a transition feedstock for our Southern African value chain.

On shareholder value delivery, our balance sheet is reset with a focus now turning to dividend resumption. We are targeting to increase our ROIC for the group to be between 12% and 15% throughout the transition up to FY '25 and above 15% leading up to FY '30, while targeting a 40% dividend payout ratio.

To conclude, let me reiterate that despite our short-term challenges, our investment case, which I shared with you at last year's Capital Markets Day remains intact. Future Sasol is not built on the promise of new business away from our core, but builds on the advantaged and differentiated FT technology as well as today's strong customer relationships and market positions.

This concludes our results presentation for today. Paul and I thank you for watching.