Tokyo Cement Group has reported a turnover of Rs. 14,523 million for the third quarter ending December 31, 2025, compared to Rs. 11,639 million in the same period the previous year. The profit after tax was Rs. 332 million, down from Rs. 1,006 million in the corresponding period last year.

This 25% increase in turnover is attributed to substantial volume growth that exceeded industry expectations, confirming a positive outlook for the year. However, the decline in profitability is due to several factors, including a reduction in selling price, rising raw material costs, currency depreciation, and the impact of capital expenditures from expansion projects in Trincomalee. Additionally, the acquisition of a vessel for coastal shipments has impacted profits. These strategic investments are expected to enhance operational efficiency and support long-term profitability.

The Economic Environment

Construction activities showed strong momentum during the quarter, as reflected in the Sri Lanka Purchasing Managers’ Index (PMI – Construction), which peaked in September and remained high through October 2025. A stable pricing environment facilitated a steady increase in construction activities, driven by hospitality, housing, and large- and medium-scale condominium projects, as well as regional infrastructure developments.

However, this positive trend was interrupted by Cyclone Ditwah, which caused extensive flooding and landslides, resulting in significant loss of life and property. The Global Rapid Post-Disaster Damage Estimation (GRADE) report by the World Bank estimated the direct physical damage to buildings, agriculture, and infrastructure at USD 4.1 billion.

The industry experienced a slowdown in the aftermath of the cyclone, continuing through December due to disruptions and the holiday season. The government, with local and international support, has launched a comprehensive reconstruction and compensation program, including a Rapid Financing Instrument (RFI) from the International Monetary Fund (IMF) and the World Bank for post-Ditwah recovery efforts.

Despite a 6% depreciation of the Rupee against the Dollar, fiscal performance remained strong, bolstered by improved revenue collection and robust inflows from tourism and worker remittances. Export earnings reached USD 12.99 billion from January to September 2025, marking a 7% year-on-year increase, while remittances rose by 20.7% year-on-year to USD 7.19 billion from January to November. The primary fiscal balance and external current account surpluses continued to show macroeconomic stability despite the cyclone’s impact.

Outlook

Several multilateral lending agencies and local investment analysts have noted the strong performance of key fiscal indicators, supported by the robust twin surpluses. The continuation of low interest rates, stable currency, and subdued inflation over the medium- to long-term is expected to provide a conducive environment for sustained economic growth.

The construction industry typically experiences its peak performance in the January to March period (4th Quarter). Current industry statistics suggest a positive outlook for the next three months, supported by the initiation of several new development projects in the new year and further encouraged by post-cyclone reconstruction efforts.

The government has allocated LKR 1.38 trillion for capital expenditure in the 2026 Budget, covering major infrastructure projects such as highways, road networks, irrigation, energy, and local infrastructure. Key state-sector projects, including the World Bank-funded Kandy Multimodal Transport Terminal (KMTT) Development Project and the Japanese-funded Kadawatha-Meerigama section of the Central Expressway, are expected to boost industry momentum.

Additionally, the awarding of the BIA Airport Development Project Phase II contract, funded by the Japan International Cooperation Agency (JICA), is anticipated to significantly increase demand within the year. A substantial portion of the LKR 500 billion supplementary allocation for post-cyclone rebuilding is expected to be directed towards reconstructing housing, transport networks, schools, and other critical infrastructure, providing further stimulus to construction activity and demand for cement and concrete.

Tokyo Cement remains optimistic about the short- to medium-term outlook and confident in the country’s economic fundamentals. The Group’s investments in capacity enhancements position it to capitalize on the anticipated growth in demand resulting from renewed development activity. By maintaining its disciplined cost management approach, Tokyo Cement Group is committed to safeguarding stakeholder value and actively supporting the nation’s economic resurgence.