Tokyo Cement posts 34% rise in revenue

Sri Lanka-based Tokyo Cement saw turnover advance 34 per cent YoY to LKR30,317m (US$82.5m) in the six months ended 30 September 2022. However the group reported an exchange loss of LKR3674m over the same period, giving a total exchange loss of LKR8733m over the calendar year so far, putting significant pressure on the group’s cashflows.

Throughout the six-month period the group deployed aggressive cost management policies and efficiency improvements that proactively reduced operational and marketing expenditures and restructured overhead costs in the ready-mix business. Due to reduced cement demand, the group's plants were running at their lowest capacity utilisations, further containing operational costs with only essential maintenance, reduced costs associated with labour and overtime, and lower energy consumption.

According to the company, “whilst this contributed to a superficial hike in profitability, some of these efficiency optimisation tools deployed to deal with the economic downturn would not be sustainable in the long term. As such, once demand picks up with the gradual resumption of construction activities, the company would be obliged to fully operationalise production functions, which would be proportionally reflected in operational expenditure.”

The second quarter ended 30 September 2022 saw turnover of LKR14,010m and profit after tax of LKR3176m.