Sanergy Group (2459) H1 2024 earnings summary

Executive summary

• Revenue for 1H2024 was US$32.1 million, down 26.5% year-over-year due to lower demand, falling prices, and customer de-stocking in key markets, with sales volumes slightly up.

• Gross loss of US$8.1 million in 1H2024 compared to a gross profit of US$5.3 million in 1H2023, driven by declining selling prices and a US$2.0 million inventory provision.

• Loss attributable to owners increased to US$14.4 million from US$4.2 million in 1H2023, mainly due to gross loss, higher administrative expenses for business expansion, and absence of prior year listing expenses.

• Inventory reduced by over 20% to US$44.1 million as of 30 June 2024, improving cash flow and operational flexibility.

• Strategic diversification into graphite anode materials (GAM) with a new facility in Italy, aiming to capture opportunities in the European new energy market.

Financial highlights

• Revenue: US$32.1 million (1H2024), down from US$43.7 million (1H2023).

• Gross loss: US$8.1 million (1H2024) vs. gross profit of US$5.3 million (1H2023).

• Gross margin: -25.3% (1H2024) vs. 12.1% (1H2023).

• Administrative expenses: US$5.8 million, up 8.9% year-over-year due to GAM project development.

• Finance costs: US$1.7 million, down from US$2.1 million due to loan repayments.

• Net loss: US$14.4 million (1H2024) vs. US$4.2 million (1H2023).

• Basic and diluted loss per share: US$(1.4) cents (1H2024) vs. US$(0.4) cents (1H2023).

• Net cash from operating activities: US$5.4 million (1H2024), with cash and equivalents at US$22.3 million as of June 30, 2024.

Outlook and guidance

• Market expected to remain challenging in 2H2024 with subdued steelmaking demand, but global steel demand may rebound 1.7% in 2024.

• World Steel Association forecasts a 1.7% rebound in global steel demand in 2024, with stronger recovery in developed markets and accelerating growth in emerging regions.

• Group remains optimistic for mid- to long-term growth, driven by global carbon neutrality trends and increased EAF steelmaking capacity.

• Continued focus on cost control, operational resilience, and strategic investment in GAM to diversify revenue streams and capture European new energy market opportunities.

• Strategic reallocation of listing proceeds to support core business and GAM expansion.