Steppe Cement’s price-focused strategy appears to have paid off in the first six months of 2017. The company reported a 4% increase in turnover, despite sales volumes falling by 15% to 0.65 million t. The company achieved an average ex-factory price of KZT 11 147 per tonne, an increase of 27% on the same period last year.
Partially offsetting the higher prices, production costs per tonne increased by 17% in the local currency in 1H17, a result of high inflation at the back end of 2016 and lower volumes in 1H17.
“Volumes are recovering strongly in 2H17,” the cement maker said. “We expect to contain cost per tonne increases.”
Operating profit stood at US$4.7 million over the period, compared to US$2.8 million in 1H2016.
The outlook for the remainder of the year is also positive, Steppe said in its interim report, released earlier this month. Kazakh economic growth is expected to be 3.5% this year, while inflation is forecast to fall to 5.6% from 15.5% last year.
Road building and construction remains strong in west and south of the country, driving demand for cement. “Steppe Cement expects a market demand of about 9 million t for the full year 2017, similar to 2016,” the company said. “We expect to achieve 18% market share for the full year.”
Overall, Kazakh cement production was up to 4.2 million t in 1H17, an increase of 5%. Imports were also up, adding 0.26 million t of supply and representing 6% of the market. Kazakh exports, meanwhile, accounted for 11% of production, up from 4% least year.
Read the article online at: https://www.worldcement.com/europe-cis/26092017/steppe-reports-positive-1h17/