Tokyo Cement Group's turnover increased to Rs. 15.8 billion in the first quarter ended June 30, 2026, though profit growth lagged due to elevated raw material and freight costs stemming from Middle Eastern geopolitical tensions.

Tokyo Cement Group recorded a turnover of Rs. 15.8 billion for the first quarter of 2026, representing growth from Rs. 12.5 billion in the corresponding period last year. However, profit after tax declined to Rs. 635 million from Rs. 668 million, indicating that cost pressures have outpaced revenue gains. The company attributed the revenue improvement to increased volumes driven by the launch of new construction initiatives.

The quarter unfolded amid significant external headwinds affecting Sri Lanka's broader economy. Tensions in the Middle East contributed to elevated costs across raw materials, insurance, and freight sectors. These pressures rippled through the economy via higher fuel and energy prices, supply chain disruptions, and a currency depreciation of approximately 7% against the US dollar. The Central Bank responded by raising its overnight policy rate by 100 basis points to 8.75% in May, a move designed to manage inflation expectations. The cement industry implemented a price adjustment in mid-April after absorbing cost escalations since the conflict began.

Demand patterns reflected both seasonal challenges and emerging recovery signs. Cement consumption dipped in April due to New Year holiday slowdowns, but improved as regional infrastructure projects resumed during the latter part of the quarter. Tokyo Cement maintains cautiously optimistic medium-term outlook, supported by anticipated government infrastructure spending, Asian Development Bank-funded post-cyclone reconstruction efforts, Indian-financed housing programs, and private investment in the Colombo Port City development. The company expects these initiatives to drive double-digit sectoral growth.

Nevertheless, risks persist. Ongoing geopolitical volatility and potential fiscal constraints could delay capital expenditure, impacting construction sector recovery. Despite these uncertainties, Tokyo Cement holds confidence in the country's economic fundamentals and its own position, citing enhanced production capacity of 4 million metric tons that remains underutilised.