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Tokyo Cement turnover exceeds Rs. 11 m in Q2 FY2021/22

04 Nov 2021

Tokyo Cement reported its results for the second quarter ended 30 September 2021 with a turnover of Rs. 11,885 million, reflecting a Year-on-Year (YoY) growth of 4%, compared to Rs. 11,413 million during the same period last year. Tokyo Cement’s sales volumes have reduced by 3% compared to the second quarter (Q2) last year due to the shortages and delays in the supply chain of raw materials. The group recorded Rs. 173 million profit before tax for the second quarter against Rs. 2,277 million for the same period last year, whilst recording a profit after tax of Rs. 132 million as against Rs. 2,104 million during the same period last year. This sharp decline in profitability was a result of increasing raw material price, currency depreciation, and exploding freight costs that significantly increased the cost of production. In addition, all other overhead costs increased throughout the financial year further impacting the bottom line. Even though Tokyo Cement was operating at maximum capacity, a shortage in cement supply was experienced in the market during this period. The maximum retail price (MRP) imposed on cement prevented free market forces from freely adjusting to keep up with the volatility of macroeconomic conditions. These matters and other outlining reasons were brought to the attention of the Consumer Affairs Authority (CAA). When it comes to the outlook of the company, the continuous increases in global coal and oil prices, in addition to freight costs, are expected to escalate the cost of raw materials further. Tokyo Cement expects the delays experienced in importing raw materials will ease out with the slow yet steady expansion of the local economy and is confident of maintaining local production levels at the highest possible capacities to ensure an uninterrupted supply. To avoid a shortage in the market, Tokyo Cement intends to supplement local production with the importation of finished cement until additional local production capacity comes online. On that note, encouraging local manufacturers to maximise existing installed production capacity, thereby reducing a dependency on imports, will contribute significantly to reduce unnecessary outflow of foreign exchange. The company will be laying the foundation for the new factory expansion in early November in order to increase the manufacturing capacity by a further one million metric tonnes by early 2023. The expansion of the Tokyo Cement Colombo Terminal, slated to be operational in the upcoming quarter, will increase the company’s bulk importation, packaging, and distribution capacity to over one million MT.  The Tokyo Cement Group is optimistic of the future and anticipates the local and global economic environment to stabilise as the pandemic situation comes under control across the world.


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