Quarterly Financial Review
Tokyo Cement Group (Tokyo Cement) reported a turnover of Rs. 16,322 million and a Profit After Tax (PAT) of Rs. 1,003 million for the 2nd Quarter ending 30th September 2025, compared to a turnover of Rs. 13,833 million and a PAT of Rs. 1,082 million, in the same period last year. Whilst volume growth remained stable quarter-on-quarter, profit margins contracted with the capitalisation of the Trincomalee expansion projects.
The Economic Environment
The quarter started with renewed optimism, highlighting a sustained boom in construction activities. Manufacturers and suppliers of construction materials reported continued volume growth, supported by a stable pricing environment, which further propelled sectoral performance. Reflecting the industry’s steady recovery, September recorded the highest sales volumes in cement sales since the onset of the 2022 economic crisis. Another key enabler of this growth was the notably lesser rainfall experienced in 2025 compared to the previous two years, which allowed construction sites to operate relatively uninterrupted.
Lower interest rates and improved macroeconomic stability spurred a significant expansion in private sector credit, driving increased investment activity across both construction and real estate sectors. Developers of large-scale residential and mixed-use projects capitalised on the low-interest environment by introducing attractive financing schemes, stimulating end-user demand. This momentum was further reinforced by government-led infrastructure development projects starting with the Kadawatha-Mirigama section of the Central Expressway and several other regional developments undertaken by local government bodies.
Robust fiscal performance was underpinned by improved government revenue collection, whilst the economy was estimated to have grown by 4.8% during the first half of 2025. Notable improvements in inflows from tourism and workers’ remittances helped stabilise the Rupee’s performance against the Dollar, and led to an upgrade in the country’s sovereign rating by all three major rating agencies.
Outlook
The recently announced credit rating upgrades coupled with a positive fiscal trajectory, signaled that the country is within reach of achieving its short-term fiscal targets. This reaffirms a steady recovery from the economic challenges that plagued the business environment in the past years.
The continuation of low interest rates, a stable currency, and subdued inflation over the medium to long term is expected to sustain this growth momentum, despite temporary shocks that may arise due to weather disruptions and energy cost fluctuations that can impact inflation targets.
Sustained economic progress, however, depends largely on the Government’s ability to attract Foreign Direct Investment (FDIs) into key sectors and to strengthen partnerships with multilateral lending agencies. A series of new policy-based lending agreements with the World Bank and the ADB are anticipated to channel critical investments into nationwide construction activities. Moreover, the resumption of major foreign-funded infrastructure projects is expected to spur demand for cement and concrete.
Tokyo Cement maintains its conservative short- to medium-term outlook but remains confident in the country’s economic fundamentals. The Group is well positioned to capture the anticipated growth in demand arising from renewed development activity with a robust production capacity. Continuing its disciplined cost management approach, Tokyo Cement Group remains committed to safeguarding stakeholder value and playing an active role in supporting the nation’s economic resurgence. —
