National Iron and Steel Company "SONASID", has announced that its net half annual profits dropped by 86.5% as a result of the reduced demand for the construction steel in the Moroccan market along with the sharp drop of the steel prices in the world market and the reflection of this on the Moroccan market.
The Company's net profit during the first half of this year amounts to 115.2 million Dirhams (14.4 million Dollars) against 856.4 million Dirhams (107 million Dollars) during the same period in the last year. The company's net margin has fallen from 18.4% in Mid 2008 to 3.6% during the first half of this year.
The company has attributed the decline of its results to the decline of its sales in the Moroccan market by 32% during this period to a level of 3.1 billion Dirhams (390 million Dollars) due t the sluggish demand for the construction steel, on one hand, and to the sharp decline of steel prices during this period, on the other.
The steel prices decline resulted in the drop of the company's stock value, which has adversely affected its operational results which fell by 90.3% during this period and amounted to 112.5 million Dirhams at the end of last June.
It is worth mentioning that the steel prices in the world market had fallen by 63% between Mid. 2008 and Mid- 2009. The steel prices have fallen by 25% during the first half of this year. The world demand has also declined by 21% during the same period, but the protection of the Moroccan iron and steel market has mitigated the effect of the decreased prices in the world market and has resulted in a sort of graduation of the reflection of the global crisis on the Moroccan iron and steel market in which SONASID Company possesses a stake of 63%.
The Moroccan market is expected to be open for the iron and steel trade by 2011 within the context of Morocco's obligations under the free trade agreements, especially with the European Union.
SONASID had already talked on an investment plan to boost its production capabilities in preparation to liberate the sector. In this context, the company has decided to hold 400 million Dirhams (50 million Dollars) of the last year's profits to meet the requirements of these new investments, but the company's board of directors has reconsidered this plan and decided to recommend the next General Assembly to distribute this amount over the shareholders as exceptional profits by 108 Dirhams (12.5 Dollars) per share, which has been considered by analysts as a reference to suspension of the company's expansion projects.
The company's containment of its debts is considered the most prominent positive points in the half annual financial statements. The company's net debt was nil at the end of June of this year after it had been amounting to 894 million Dirhams (112 dollars) in the same period in the last year.
The company owns two mills in Morocco, the first one in Al-Nadour region in the north of Morocco whose production capacity is 559 thousand tons of construction steel bars and the second is in the industrial Al-Jorf Al-Asfar region to the west of Casablanca whose production capacity is 356 thousand tons of construction steel bars and 478 thousand tons of steel billets. The company controls 63% of the Morocco's iron and steel market. It is listed already in Morocco's exchange.
SONASID is a subsidiary of European ARCELOR-MITTAL Group which has undergone a lot of the repercussions of the global crisis and it had to take hard measures to shrink the volume of labour and production. ARCELOR-MITTAL controls 50% of the "New Steel Industrial Company" in Morocco. This latter company owns 64% of SONASID. The National Investment Company in Morocco is the second largest shareholder in the capital of the "New Steel Industrial Company" with a stake of 25%.
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