According to the Zhitong Finance App, Shengneng Group (02459) announced results for the year ended December 31, 2023, with revenue of US$72.292 million, down 37.4% year on year; gross profit of US$841 million, down 96.8% year on year; net loss of US$154.76 million, profit of US$7.496 million for the same period last year; basic loss of 1.6 US cents per share.

The Group's revenue in fiscal year 2023 decreased by approximately 37.4% year-on-year due to weak customer demand and downstream supply chain de-inventorization. Despite the Group's continued efforts to maintain a relatively stable average selling price, these macroeconomic uncertainties led to a 29.6% decrease in the Group's graphite electrode sales in fiscal year 2023 compared to fiscal year 2022. Earnings declined in all regions. It is broadly consistent with the slowdown in world crude steel production in 2023.

As far as sales costs are concerned, reduced production and fixed indirect costs have led to an increase in the Group's average sales cost per metric ton of graphite electrodes. In order to cope with short-term market weakness, the company carefully assesses the net realizable value of inventory based on the current market price of graphite electrodes. As a result, the company obtained an inventory provision of approximately USD 3.3 million in fiscal year 2023 (zero USD in fiscal year 2022). As a result, gross margin fell from around 22.5% in FY2022 to around 1.2% in FY2023.