19 September 2023

 

 

Steppe Cement Limited

("Steppe Cement" or the "Company")

Interim Results for the Half Year Ended 30 June 2023 and General Market Update

 

 

1. Interim Results

During the six-month period to 30 June 2023, the Group posted revenue of USD36.9 million, a decline of 14% from USD43.1 million in the corresponding period in 2022. The decline was mainly attributable to the 11% lower sales volume. The drop was concentrated in the first few months of the year when cement prices were maintained. Consequently the Company decided to adjust pricing to recover the volumes. 

 

	6 months ended 30 June 2023	6 months ended 30 June 2022	% of  change
Sales (Tonnes)	749,034	837,063	-11%
Consolidated Turnover (KZT million)	16,702	19,779	-16%
Consolidated Turnover (USD million)	36.9	43.1	-14%
Consolidated profit after tax (USD million)	0.1	10.2	-99%
Earnings per share (Cents)	0.1	4.7	-99%
Average exchange rate (USD/KZT)	454	449	1%

 

The average sales price was USD50 (KZT22,665) per tonne compared with USD52 (KZT23,391) per tonne in the corresponding period in 2022.

 

The gross margin was reduced to 26% in the six-month period to 30 June 2023 compared with 46% in the same period last year due to the combination of higher production costs, lower volumes and  a lower selling price. Selling expenses increased by USD0.9 million or 16% to USD6.2 million, while general and administration expenses increased 7% by USD0.2 million to USD3.4 million.

Volumes are recovering in the second half of the current year and prices have been slightly increased, while the cost of production is improving as well.

General inflation in Kazakhstan was 17% during the period, but the situation has improved in the second half of 2023.

 

The Group posted a small net profit for the period of USD0.1 million compared with USD10.2 million profit after tax in the same period in 2022.

 

 

2. Production and capex

·    Cash production costs increased by 11% in KZT in the first half of 2023 primarily due to the higher electricity, diesel and spare parts for maintenance costs together with lower production volumes and significant repairs in line 5.

·    There were significant stoppages and repairs in the first half of 2023 as a consequence of the unexpectedly cold weather during the general stoppage of November 2022.

·    The separator of cement mill number 1 has been commissioned and work has started in

the separator of cement mill number 2. Together these two projects will allow the increase of slag usage, reduce power consumption and improve cement quality and stability.

 

 

 

 

3. Update on the Kazakh cement market

·    The Kazakh cement market during the first half of 2023 reduced by 5.6% compared to the same period last year.

·    The Company expects to maintain its market share at around 14% for the full year.

·    Exports from Kazakhstan [in the first half of 2023] remained the same as in the corresponding period in 2022 at 0.55 million tonnes.

·    Imports in the current period represented 4.3% of the local market, 2% less than in 2022.

 

4. Finance

·    Total finance costs for the period were USD 0.5 million with interest expenses on bank debt falling to USD 0.2 million mostly on subsidised loans while the Company maintained interest expenses on lease liabilities at USD 0.1 million after the application of IFRS 16 on the 3-year wagon leases. The rental on those wagons was previously treated as selling expenses. The contract to rent wagons is due for renewal in the second half of 2023.

·    The borrowings of the Company as at 30 June 2023 were USD6.7 million while we

carried a cash balance of USD6.0 million. For comparison, on 30 June 2022 the

Company had USD5.4 million of borrowings and USD14.7 million in cash.

 

 

 

A pdf copy of the announcement and the full interim financial statements is available on the company's website at www.steppecement.com

 

 

 

For further information, please contact:

Steppe Cement Limited	www.steppecement.com
Javier del Ser Pérez, Chief Executive Officer	Tel: +(603) 2166 0361
Strand Hanson Limited (Nominated & Financial Adviser and Broker)	www.strandhanson.co.uk
James Spinney / Ritchie Balmer / Robert Collins	Tel: +44 20 7409 3494