Steppe Cement Ltd shares sank on Friday, as the company reported a downturn in its Kazakhstani operations and announced a shareholder return program.

Steppe Cement is a cement producer and seller with a manufacturing facility in Karaganda, Kazakhstan.

The stock was down 17% at 17.00 pence each in London on Friday morning.

For the quarter ended March 31, Steppe reported a drop in cement sales to 175,383 tonnes for KZT3.8 million, around $8.4 million, from 214,832 tonnes for KZT4.9 million a year prior.

The average price for cement deliveries also dipped to KZT21,545 from KZT22,985 per tonne over the same period, with the company’s market share falling to 11.5% from 12.7%.

Steppe said that the drop-off was due to a significant increase in transportation costs and shipments to the southern region of Kazakhstan, which took a toll on the company’s margins.

Given that the cement market is historically weaker in winter than summer, the company has opted ‘to build up clinker inventory in preparation of the summer season, rather than make sales at depressed prices’.

Cement clinker production has increased 25% in the quarter compared to the first quarter of 2023, Steppe said, and it considers itself ‘well positioned to take advantage of the high season’.

Separately, Steppe announced a proposed capital repayment plan of 1.5 pence per share.

Subject to approval at a general meeting on April 26, the move will reduce the company’s share capital to $69.6 million from $73.8 million.

While the company intended to return capital to shareholders via dividends, Steppe said that new legislation in Malaysia, the Netherlands and Kazakhstan would subject such a payment to increased tax charges.

The proposed capital reduction will be funded using the company’s existing cash balances, and will have no effect on earnings per share, Steppe added.

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