Steppe Cement swings to full year loss, Kazakhstan
Steppe Cement has swung to a FY pretax loss of US$8.1m in 2014 from a US$13m profit in the previous year. Revenue totalled US$116.63m in 2014 versus US$127.98m in the year before. The net loss amounted to US$7.9m from a profit of US$10.5m in 2013.
The 2014 results were affected by the depreciation of the Kazakshtan Tenge in February, the subsequent devaluation of the Rouble and the lower oil price.
During the year the company ceased operating the clinker production in the old wet lines and took a full impairment against its remaining carrying value. “We expensed full depreciation and interest costs for the dry line assets for the first time,” Steppe said in a statement
To facilitate the ramp up of the newly installed capacity it increased sales volume significantly (18 per cent), partly at the expense of price (-9 per cent), the company added.
The four original wet lines were operated until October 2014, Line 5 at 50 per cent of its capacity and Line 6 at 85 per cent. When their ramp up is completed, Lines 5 and 6 will be able to produce a combined 2Mta.
Steppe Cement refinanced its long-term debt in April 2014 and purchased 330 rail wagons that will cover 40 per cent of its yearly needs with a new long-term loan. The short term loan lines have been extended and increased allowing the company to maintain flexibility in production.
During the year, the company sold 1.6Mt of cement, up 18 per cent, compared to 1.37Mt in 2013. The Kazakh cement market in 2014 was 8.5Mt, an increase of five per cent compared to 8.1Mt in 2013. The increase in market size was taken up by the ramp up of Steppe Cement, Caspi Cement (HeidelbergCement), Jambyl Cement (Vicat) and Kazakhcement (local ownership). The share of imports fell from 19 per cent in 2013 to 13 per cent in 2014.
Expectations are that overall market demand in 2015 will increase by three per cent to 8.8Mt and the increase will be taken by the ramp up of Steppe Cement, Caspi Cement and imports depending on the exchange rate of the Rouble against the Tenge during the year.
