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Steppe Cement reports FY14 results

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World Cement,

Kazakhstan’s Steppe Cement has issued its statement of annual results for 2014. Figures were affected by the depreciation of the Kazakhstan Tenge, the subsequent devaluation of the Rouble and the lower oil price. Steppe Cement has long-term USD-denominated loans but assets denominated in Tenge.

In 2014, the company stopped operating its old wet lines and made the most of the new dry capacity by increasing sales volumes significantly (+18%), partly at the expense of lower prices (-9%). The company has successfully increased its market share and going forward will realise the benefits of lower production costs due to increased efficiency. The impact of the switch to the dry process should be seen on the company’s bottom line this year. The four wet lines ceased operating in 2014, and the new lines 5 and 6 were operated at 50% and 85% capacity, respectively. Once fully utilised, the two dry lines will produce a combined 2 million tpy (expected in 2016).

Key financials were very much affected by exchange rates, exemplified by the 7.5% increase in consolidated turnover in KZT that equated to an 8.9% decline in US$.

The Kazakh cement market in 2014 was 8.5 million t, an increase of 5% y/y. The increased demand was met by ramped up capacities of Steppe Cement, HeidelbergCement’s Caspi Cement, Vicat’s Jambyl Cement and local company Kazakhcement. Imports decreased from a 19% market share in 2013 to a 13% share in 2014. Steppe Cement expects a further 3% increase in demand in 2015 to 8.8 million t. In 2014, Steppe Cement’s market share increased to 19% and this is expected to be maintained in 2015.

The company completed its outstanding payments on the line 5 investment in 2014. It changed the preheater fan motors on line 6 and purchased 330 new rail wagons of 72 t capacity, which represents 40% of the company’s needs. This year the company will focus investment on increasing milling capacity, logistics, packing and distribution. It will limit its yearly capex depending on the market conditions and the availability of financing in KZT.

Adapted from press release by

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