Steppe swings to first-half loss

Kazakhstan cement producer Steppe Cement Ltd posted a consolidated loss after tax of US$4.1m for the six months ended 30 June 2014 against a profit of US$2.2m in the comparative period of last year.

Sales increased by 26 per cent in volume and 16 per cent in tenge (KZT) in 1H14 against 1H13. However, as a consequence of the February devaluation of the KZT against the USD, turnover in US dollars decreased by five per cent.

The average ex-factory price declined from KZT12,084/t in 2013 to KZT10,797/t or 11 per cent in the current period.

Kazakh market update
The company reported that the Kazakhstan market increased by 2.5 per cent during the first half. Steppe Cement expects full year demand to increase by 2.4 per cent to 8.4Mt.

Imports into Kazakhstan have been decreasing since late 2013 and this trend has accelerated after the Tenge devaluation in February. In the first half of 2014 imports represented 16 per cent of the market (down from 20 per cent in 2013) and Steppe Cement expect the share of imports to be reduced to 11 per cent for the full year as the factories commissioned in 2013 and 2014 reach capacity.

Overall production of all factories in Kazakhstan has increased by 11 per cent in 2014 compared to 2013. Exports now represent six per cent of production, up from three per cent a year ago.

Prices are expected to remain flat in the remaining months of 2014 as all the factories compete to maintain their market share.

Steppe Cement increased its market share from 15 per cent in 1H13 to 18 per cent in 1H14 and currently expects to increase its market share to at least 19 per cent for the full year.