Fitch Ratings affirms and withdraws Central Asia Cement’s rating

Fitch Ratings affirms and withdraws Central Asia Cement’s rating
Published: 13 September 2013


Fitch Ratings has affirmed and simultaneously withdrawn Central Asia Cement's (CAC) National Long-Term Rating at 'BB-(kaz)' with Positive Outlook and senior unsecured bond rating at 'B(kaz)'.

Fitch says it will no longer have sufficient information to maintain the ratings, as CAC has chosen to stop participating in the rating process.

"Accordingly, Fitch will no longer provide ratings or analytical coverage for CAC," said Fitch in a statement.

Key rating drivers include the bouyant Kazakh cement market which continued showing a positive trend in H113, with a growth rate of 11 per cent. Steppe Cement, CAC's ultimate holding company, reduced its market share to 16 per cent from 19 per cent, as the company strategy was to pursue higher selling prices than volumes. Steppe Cement's selling price increased +15 per cent YoY, allowing revenue to rise by six per cent, despite a decline in volumes.

Fitch notes that Steppe Cement has a leading position in the Kazakh cement market and a cost advantage over its competitors, thanks to the favourable location of its Karaganda plant, which has been partially renovated to efficient dry technology. "The rating also reflects the healthy long-term prospects for cement demand in Kazakhstan, backed by solid GDP growth, strong potential for residential demand, and by the upgrading of infrastructure," the ratings agency said in a statement.