(Ecofin Agency) - In Morocco, Société Nationale de Sidérurgie (SONASID) recorded a net loss of 62.1 million dirham in 2015. It is the third loss of the firm in the past six years, following 2010’s (-18.8 million dirham) and 2012’s (93 million dirham), this despite the joint-venture’s, controlled by SNI and Arcelor Mital, efforts to cut operational costs.

In a profit warning to investors a few days ago, the firm’s heads revealed that operations have been negatively impacted by increasing supply for steel from China, maintained production levels in the country amid its economic slowdown. Due to this, steel’s price crumbled by 13%, aggravated by stagnating demand in Morocco whose construction sector seeks new benchmarks.

In this context, turnover fell by 20% from 4.25 billion dirham, to 3.5 billion dirham. Reduction of charges (-16%) was lower than sold volumes (-20%).

“SONASID kept its leading position in 2015, due to its dynamic commercial strategy centered on direct distribution. A strategy initiated by SONASID in 2013 with SONASID Distribution, which registered a significant progress on the market and which should keep on that trend in 2016 by expanding this model,” said the management of the company who holds about 50% of the steel market in Morocco.

With a negative net share profit (-15 dirham), dividend’s distribution might not occur, after generous initiatives in 2013 and 2014 when SONASID paid it shareholders, 58 dirham and 41 dirham, respectively. This represents dividend yields of 262.4% and 162.4%. At mid-day Tuesday 29 March, 2016, SONASID’s share slumped 2.4% with a low volume of transactions.

Idriss Linge