Annual Financial Report

Steppe Cement Limited

27 May 2026

 

27 May 2026

Steppe Cement Limited  

("Steppe Cement" or the "Company") 

Final Results for the Year Ended 2025

Notice of Annual General Meeting 

The Board of Steppe Cement (AIM: STCM) is pleased to announce the Company's final results for the year ended 31 December 2025, which are set out below.

Highlights:

Strong Market Recovery and Volume Growth

The Kazakh cement market experienced significant growth in 2025, with consumption increasing by more than 20% to exceed 14 million tonnes, supported by residential construction, infrastructure projects and ongoing urbanisation. Steppe Cement maintained a 14.4% market share of the cement market while increasing sales volumes by 21% to approximately 2.07 million tonnes through improved operational reliability and increased clinker production.

Significant Improvement in Financial Performance

Revenue increased to USD 101.5 million, up 20% year-on-year, driven by higher sales volumes and improved pricing. Gross profit rose to USD 28.4 million, while EBITDA improved to USD 11.8 million from USD 7.5 million in 2024. Net profit increased to USD 3.2 million (2024: USD 1.0 million), reflecting improved operational efficiency, tighter cost control and a more favourable market environment. The Company ended the year with a strong cash position of USD 10.5 million.

Operational Progress and Capacity Expansion

The operational improvements implemented on Line 6 continued to deliver strong results, with the Company's clinker production increasing to 1.63 million tonnes in 2025 from 1.47 million tonnes in 2024. Following this progress, the Board approved a USD 30 million expansion project to increase clinker production capacity from 3,000 to 4,500 tonnes per day, supporting future cement production capacity of approximately 2.5 million tonnes annually. Completion is expected by summer 2027.

Steppe Cement wishes to inform that its Annual General Meeting will take place at its Malaysian Office at Suite 10.1, 10th Floor, West Wing, Rohas Perkasa, 8 Jalan Perak, Kuala Lumpur, Malaysia on Friday, 26 June 2026 at 4.00 p.m. (UTC+8). 

A copy of the Annual Report 2025 and the Notice of Annual General Meeting will shortly be made available on the Company's website at www.steppecement.com.    

For further information, please contact: 

Steppe Cement Limited  Javier del Ser Pérez, Executive Chairman	www.steppecement.com Tel: +(603) 2166 0361
Strand Hanson Limited (Nominated & Financial Adviser and Broker) James Spinney / Ritchie Balmer / Imogen Ellis	www.strandhanson.co.uk Tel: [phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019.  

CHAIRMAN STATEMENT

Dear Shareholders,

After 27 years as Chief Executive Officer of the Company, I have transitioned to the role of Executive Chairman while leaving the CEO role in the capable hands of Petr Durnev. In this new capacity, I look forward to supporting Steppe Cement as it enters its next expansion phase.

Surprisingly, the Kazakh cement market has strengthened following a period of sustained competition and margin pressure over the past three years. Cement demand in Kazakhstan increased by 21%, resulting in higher sales volumes and pricing conditions in local currency terms. Consequently, industry utilisation levels have moved upwards.

The year ended 31 December 2025 was characterised by a strong recovery in construction activity in Kazakhstan. According to official statistics, the total volume of construction work increased by 15.9% year-on-year to KZT 10.7 trillion or 6% of GDP. This expansion was driven mostly by residential construction (estimated at 65%) where 20 million square meters of housing were commissioned, followed by infrastructure (construction of roads, railways and related projects) and by non-residential buildings.

New crane for Linpreheater tower

The residential housing sector was driven by the private sector that provided 90% of the supply while public housing was 10%.

Construction growth was geographically widespread, with increased activity recorded in most regions, including significant expansion in the major urban centres of Almaty, Shymkent and Astana and, as well as in the industrial regions.

In addition to residential construction, there was continued investment in social infrastructure, including the commissioning of schools, healthcare facilities and other public buildings during the year.

The outlook for the Kazakh construction sector remains positive. Population growth of more than 200,000 people per year (now reaching 20.5 million), growing urbanisation particularly in the south, residential development and infrastructure investment means that GDP per capita now equals or exceeds that of Turkey or Malaysia.

While residential construction growth is expected to continue at a moderate pace, infrastructure and non-residential projects are likely to remain significant contributors to overall demand. At the same time, the Board remains mindful of potential risks, including cost inflation, exchange rate volatility and competitive pressures from imports in the southern regions that may eventually spill in the central market. We will be watching for any change of momentum in the market to adapt our strategy quickly.

Support equipment for new raw mill 5 

The Company is well positioned to benefit from this environment, supported by its established market position, strong operational capabilities, experienced management team and a very sound balance sheet. Its location, near the major industrial and urban centres of Astana, Karaganda and Temirtau, and near key raw material sources including limestone, clay, coal, iron ore and slag, continues to be a significant strategic advantage.

The production facilities operated at high utilisation rates for much of the year, reflecting both improved market conditions and the benefits of ongoing operational improvements. Management maintained a disciplined approach to cost control, enabling the Company to respond effectively to increased demand despite continued inflationary pressures, particularly in energy, transport and labour. Import volumes also increased during the year, reflecting regional supply dynamics and price differentials.

Interior new clay crusher filter

The management continues to focus on operational excellence and disciplined expansion. During the year, management implemented a series of improvements that allowed to increase clinker production by 11%. Following this success, the Board agreed an expansion plan to take production from 2 to 2.5 million tonnes with a budget of USD30 million that includes a new cooler, a new raw mill, rebuilding of the riser duct, new stage 4 cyclones, modifications to the kiln drive, kiln seal, coal mill and cooler heat recovery. The expansion will provide reduced per tonne consumption of coal and electricity and doesn't require any increase in fixed expenses. There will be only a small increase in number of operators for the new raw mill number 5 with a capacity of 120 tons per hour. Completion is expected by the summer of 2027. We will be providing updates on the construction progress.

The cement making process consumes substantial amounts of energy and emits CO₂ both due to the heating of the materials as well as the chemical reactions in the process. The sector has traditionally reduced these emissions through capital investment, heat recovery projects, alternative fuels use and clinker substitution. The Company has historically reduced its emissions with the closure of the wet lines, the replacement of most of the process filters and substantial improvements in the heat recovery. The energy consumption and emissions are in line with similar factories around the world.

Clay filter purging system

To comply with future ecological standards, Steppe is negotiating a framework agreement with the government that will set up targets in line with worldwide Best Available Technologies standard ("BAT") by 2035. The Company has already committed to spend USD5 million in the next two years to complete the full transition to bag filters from electrostatic precipitators. Once the agreement is completed, we expect the current emission tax to be substantially reduced from its current level of USD1.4 million per year.

The current production expansion underway together with the planned increase of slag use in the production of cement will substantially improve the ecological footprint and lower the energy consumption per tonne.

The Board will continue to keep a cautious approach to capital allocation, prioritising investments that deliver attractive returns while maintaining a strong balance sheet. We intend to use our cash flow to finance the majority of these investments, and we have arranged loans with local banks to cover the rest.

In addition, as part of its commitment to the communities in which it operates, the Company continues to support the village of Aktau through partnerships which have been in place since 1998. We sponsor numerous sport teams in the area and contribute to essential community infrastructure by undertaking major repairs in the heating systems and other municipal utilities. The Company also offers support to employees and ex-employees who experience health issues and provides free annual health medical check-ups to all employees who require them.

Following the improved trading performance in 2025, the Board is reviewing its approach to the allocation between capex and an increased dividend. The final decision will depend upon:

·      the Company's cash generation and debt commitments during the year.

·      ongoing and planned capital expenditure requirements; and

·      prevailing market conditions and outlook.

In April 2026, we managed to complete the first stage of restructuring with the removal of two companies in the group: The intermediary holding Steppe Cement BV and Mechanical and Electrical in Malaysia. Currently the main operating companies in Kazakhstan are Karcement JSC and Central Asia Cement JSC both directly owned by Steppe Cement Bhd. Sdn. in Malaysia. With the current tax code and double taxation treaty in place with Malaysia, the dividend withholding tax will be 5% up to USD2 million paid to the holding from each Kazakh company and 10% for any amount higher than that.

On 19 November 2025, the Company subscribed to the first tranche of bonds issued by its wholly owned subsidiary, Karcement, amounting to USD10 million pursuant to a sale and purchase agreement entered into by both parties. The bond carries a fixed annual coupon rate of 8%, payable quarterly, and has a maturity period of 10 years from the subscription date. Interest on the bonds is tax free.

The subscription forms part of the approved programme to issue up to USD50 million in bonds, intended initially to refinance the remaining USD13 million outstanding on the loan owed  by Steppe Cement Ltd to Karcement. Depending on future market conditions, Karcement can also use this instrument to replace bank debt.

A further step in the restructuring process, involving a holding company already incorporated in the Astana International Finance Centre (AIFC), remains under consideration. Dividends paid by companies incorporated in AIFC to their holding companies are not subject to dividend withholding tax.

On the macroeconomic front, the Kazakhstan Tenge appreciated against the USD during 2025, and the trend has continued well into 2026. This is unusual, as the currency has historically depreciated by approximately 5% per year against the USD, broadly in line with inflation and interest-rate differentials. However, the current political conflicts, the privileged position of Kazakhstan as a big energy production country and its geographic position between China and Russia, point toward a positive short-term outcome for the currency.

Current inflation is 11% and the base interest rate is still high at 18%.

Finally, I would like to thank Mr Xavier Blutel for his many years of service to the Company, and welcome Saida Djarbolova as a new Independent Non-Executive Director. Together with the new CEO, Petr Durnev, Ms Djarbolova will help the Company in the relation with the Government and Kazakh institutions.

On behalf of the Board, I would like to thank our employees, management, customers and shareholders for their continued support.

Yours sincerely,
Javier del Ser
Executive Chairman

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 (cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2025

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2025 (cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 (cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 (cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 (cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 (cont'd)

(i)        Cash outflow for leases as a lessee are as follows:

(ii)       Reconciliation of movements of liabilities to cash flows arising from financing activities:

STEPPE CEMENT LTD

(Incorporated in Labuan, Malaysia)

STATEMENTS OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 (cont'd)

(ii)       Reconciliation of movements of liabilities to cash flows arising from financing activities: (cont'd)

The annexed notes form an integral part of, and should be read in conjunction with, the financial statements.

 

END