Steppe Cement Reports 21% Revenue Growth in Q3 2025 and Plans Bond Restructuring

Why prices did not lift more despite strong demand

Despite the demand upswing, producer prices in KZT have not meaningfully increased. Management cites:

• Reduced exports and competition from suppliers targeting an oversupplied Uzbek market.
• New capacity added by a competitor in the Zhambyl region.
• Sharp rises in railway transportation costs.
• A short-term shortage earlier in the season that was quickly offset, stabilising prices.

Translation: the market is hot on the demand side, but supply competition and higher logistics costs have capped pricing power in KZT. That makes Steppe’s volume growth particularly important to drive revenue.

Cash, capex and potential capital return

As of 6 October 2025, Steppe Cement held USD 14 million of cash and cash equivalents. The company intends to reserve a portion for growth capex (capital expenditure) and will update the market when plans are finalised.

Crucially, the Board still envisages returning surplus capital to shareholders towards the end of the year. The form and amount are not disclosed, but the signal is shareholder-friendly.

Bond restructuring on AIX: what it is and why it matters

Steppe currently has a USD 27 million inter-company loan to its subsidiary Karcement JSC, carrying roughly 8-9% interest and subject to 10-15% withholding tax on the interest. The company plans to restructure this into a publicly listed bond issued by Karcement JSC on the Astana International Exchange (AIX), held by Steppe, with a fixed 8% coupon (a bond’s annual interest rate).

As part of this, documents will be registered allowing up to USD 50 million of bonds to be issued. There is no immediate plan to issue more debt to Karcement, but the listing creates optionality to raise funds from local institutional investors to support growth projects. The company will update on the internal debt refinancing in due course.

In plain terms: this is about tidying the capital structure and opening a door to local capital if needed. Any tax or cost benefits were not disclosed.

Tax disputes resolved: one win and a small settlement

The long-running tax disputes involving subsidiaries have been resolved. The CAC JSC case was concluded in Steppe’s favour by the Supreme Court of the Republic of Kazakhstan.

The KAC JSC case was settled for approximately USD 0.1 million, with the remainder of claims withdrawn and dismissed. This removes an overhang and should simplify investor focus back onto operations and growth.

CEO’s view: record production, capex discipline

The CEO reports record production of clinker and cement in the first nine months. Clinker is the intermediate product used to make cement. The plant is increasing output and is aiming to drive further growth while limiting capex.

That combination – rising production and restrained spending – is supportive for cash generation, provided pricing and costs remain manageable.

My take: positives, pressure points and what to watch

What looks positive

• Top-line momentum: 21% revenue growth in Q3 and 28% in the nine months, with volume and price both contributing.
• Market growth: Kazakhstan demand is strong, with Steppe targeting a steady 14-15% share.
• Cleaner slate: tax disputes resolved, including a Supreme Court win and a minor settlement.
• Shareholder signal: the Board still envisages a capital return towards year end.
• Financing flexibility: AIX bond framework provides a future funding lever for growth projects.

What needs watching

• FX headwinds: tenge devaluation shaved USD pricing and will affect USD-reported metrics.
• Competitive intensity: new local capacity and higher imports keep a lid on producer prices.
• Logistics costs: sharp rises in rail transport could squeeze margins if not offset.
• Export dynamics: Uzbekistan’s oversupply has curtailed a key outlet, raising reliance on domestic demand and other exports.
• Capex plans: details, timing and expected returns are not disclosed yet.

Overall, this is a constructive update. Revenue growth is healthy, production is at record levels, and the company is preparing smarter funding options while still signalling a return of surplus capital. The main risks are largely external – currency, competition and transport costs.

Jargon buster

• VAT: value-added tax, excluded from the average price quoted.
• Capex: capital expenditure on growth or maintenance projects.
• Coupon: the fixed interest rate paid on a bond.
• Withholding tax: tax withheld on interest payments to the lender.
• Clinker: an intermediate material used to produce cement.