Steppe Cement increases sales in a falling market

Steppe Cement increases sales in a falling market
Published: 12 August 2009

The Kazakh cement producer Steppe Cement increased the amount of cement sold in the first half by 7.3% to 0.42Mt, even though the first quarter had shown a 5.1% decline.  The average price, however, dropped by 42.6% in local currency and the turnover fell by 38.4%.
 
The average ex-factory cement price on conversion was US$51.49, while by the end of last month this had increased to US$68.65 per tonne. This compares with US$126/t in the first half of last year, but the Kazakh currency did fall in value by some 20%. Net debt at the end of June stood at US$72.6m, compared with US$73.4m a year earlier, but this is after the raising of additional capital in May of this year.  The intermediate holding company Central Asia Cement was absorbed by Steppe Cement last month, simplifying the corporate structure.
 
Cement consumption in Kazakhstan dropped by around a quarter to some 2.1m tonnes compared with the first half of last year.  This implies a substantial increase in the company’s market share from 14.5% to 20.3%, with Steppe Cement currently being the lowest cost producer.  For the full year, Steppe Cement expects the Kazakh cement demand to fall from 5.7Mt to some 4.5Mt as the economy is expected by the IMF to contract by around 2% this year, with growth of 1.5% being forecast for 2010.