Kazakhstan: devalued tenge affects Steppe Cement

Kazakhstan: devalued tenge affects Steppe Cement
Published: 25 May 2016


The sharp devaluation of the Kazakh tenge saw the 2015 results of Steppe Cement affected as import pressures waned. Until August 2015 local producers had to lower their selling prices to fend of imports into Kazakhstan due to the relative strength of the tenge against the rouble. As a result, sales volumes in tonnes rose by only two per cent YoY to 1,643,136t in 2015 from 1,612,709 in 2014 while prices fell by eight per cent. After September imports slowed significantly, along with the economy and cement demand.

Steppe Cement’s posted a turnover of KZT19.537bn (US$57.8m) in 2015, down seven per cent from KZT20.926bn the year before. Loss after tax reached US$3.4m, an improvement of 56 per cent on 2014, when it reached US$7.9m.

However, in terms of production, the company produced exclusively from its dry-process lines, lowering the cost of production in excess of the reduction in price, and therefore, improving its gross margin. The 1.1Mta Line 5 saw a utilisation rate of 85 per cent while the 0.8Mt Line 6 ran at 87 per cent. In 2016-17 Steppe Cement expects to make small capital investments to raise capacity of Line 5 and 6 to 1.2Mta and 1Mta, respectively.