LONDON (Alliance News) - Steppe Cement Ltd Friday said it swung to a substantial pretax loss in 2014 on the back of the devaluation of the Russian rouble and Kazakhstan tenge and the fall in oil prices.
The construction materials producer reported a pretax loss of USD8.1 million in 2014, swinging from a USD13.0 million pretax profit in 2013, as revenue declined and costs rose in dollar terms.
Revenue dropped 8.9% to USD116.6 million in the year from USD128.0 million as cost of sales increased to USD80.9 million from USD74.2 million. In tenge terms, revenue rose by 7.5% to KZT20.92 billion from KZT19.46 billion.
Finance costs rose to USD4.8 million from USD2.7 million, whilst other expenses rose to USD4.6 million from USD1.6 million, partially offset by impairments falling by around USD900,000 in the period compared to year earlier.
"The 2014 results were affected by the depreciation of the Kazakshtan tenge in February, the subsequent devaluation of the rouble and the lower oil price," said the company.
Cement production from wet lines fell 21% in the year to 465,879 tonnes and have subsequently ceased operation in the fourth quarter of 2014, whilst dry lines contributed 1.1 million tonnes. Sales of cement rose by 18% year on year to 1.6 million tonnes from 1.4 million tonnes, but average cement prices fell 9% in the period.
"The production from the dry lines will increase significantly in 2015 to cover for the previous wet lines production plus the expected sales increase in line with the market," it said.
Cash production costs in the dry lines was reduced to USD38 per tonne from USD43 per tonne in 2013 and the company is expecting this to fall further in 2015 as production ramps up. Selling costs also fell in the period to USD11.9 per tonne from USD14.5 per tonne.
"Despite the drop in the oil price, the government remains commited to a strong infrastructure plan and the outlook of the construction industry in Kazakhstan remains positive driven by the Expo 2017 and road building programs," it said in a statement.
Steppe shares were down 7.7% to 24.00 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Steppe Cement (STCM)