Steppe Cement records 'good' revenue growth as it focuses on local market

Steppe Cement said in a trading update on Thursday that it recorded “good” revenue growth in 2021, with positive market conditions for the business.

The AIM-traded firm said its focus was on the domestic market in Kazakhstan, where its market share remained resilient.

It said recent changes in the Kazakh government, as well as “disturbances” in the main cities, had not affected the continuous operations of the cement factory.

Steppe Cement recorded revenue for the year ended 31 December of KZT 36.02bn (£60.09m), which was 16% higher than the KZT 30.96bn recorded in 2020.

In 2021, cement sales volumes totalled 1,688,544 tonnes, up from the 1,645,744 tonnes achieved in the prior year.

The average price for delivered cement, excluding VAT, was KZT 21,332 per tonne, representing a 13% increase year-on-year, while the average ex-factory price stood at KZT 18,134 per tonne, up from 2020’s KZT 15,760 per tonne, and representing $43.00 per tonne based on 2021's average exchange rate.

As the company was limited by its production, Steppe said it concentrated on markets closer to its factory.

“In 2021, the cement market consumption in Kazakhstan increased by 23% to 11.6 million tonnes from 9.4 million tonnes in 2020,” the board explained in its statement.

“This unexpectedly big increase in domestic demand has been the consequence of the changing in the withdrawal policy for pension funds.

“Citizens were allowed, under certain conditions, to allocate money from their pension funds to property or health.”

Steppe Cement said its local market share was 13.9%, while exports decreased by 57.2% to 86,500 tonnes in 2021.

Overall, Kazakhstan imported 0.8 million tonnes of cement, up from 0.6 million tonnes in 2020, and exported 1.6 million tonnes, down from two million tonnes.

“We have a healthy cash balance and are continuing our capital expenditure programme to increase the production capacity of the company by 5% by the summer of 2022.

“We are in the period of lowest sales of the year, and the directors do not believe they presently have sufficient visibility on economic matters to make an accurate prediction on demand for 2022.”

Steppe Cement said its full results and audited dollar-denominated accounts for the year would be published in May.

At 1515 GMT, shares in Steppe Cement were down 1.45% at 40.9p.