Cement demand climbs to 4.7mn MT

But industry faces headwinds, says Tokyo Cement

• Attributes increase to “latent demand and low base effect of previous year
• Notes market dynamics have shifted with intensified competition
• Highlights that share of local production has grown, supporting national goals of industrial 
• self-sufficiency and domestic value creation.

Sri Lanka’s cement industry is showing early signs of a resurgence, with domestic demand rising to 4.71 million metric tonnes (mn MT) in the past year, up from 3.96mn MT a year ago, according to Tokyo Cement Group.

The increase was attributed to the “latent demand and low base effect of the previous year”, the company said in a statement, as the broader construction sector begins to regain momentum after a prolonged slump.

However, Tokyo Cement noted that the market dynamics have shifted with intensified competition. The entry of a new local grinding operator and multiple cement importers, capitalising on the relaxed import restrictions, have added pressure to an already saturated market, it said.

Still, Tokyo Cement highlighted that the share of local production has grown, supporting national goals of industrial self-sufficiency and domestic value creation.

Looking ahead, the company expects demand to improve, underpinned by private sector-led construction activity and government infrastructure projects. It said that the recovery would be supported by active fund disbursements from international development agencies and bilateral partnerships with countries such as India, Japan and China.

But the outlook remains clouded by the external risks. 

“The heightened volatility in the global trade policies and ongoing regional conflicts pose downside risks that add to the uncertainty and may jeopardise some of the hard-fought economic gains the country is working towards,” the company warned.

“While the immediate impact may be contained within the sectors that are directly exposed to such trade barriers, broader effects from global price increases could lead to demand contractions across key markets,” it said, adding that the tensions in the Middle East, Europe and South Asia could weigh on investor sentiment and capital flows.

“These factors may constrain capital inflows, dampen export prospects and impede economic recovery,” Tokyo Cement added.

Despite a cautious short-to-medium-term view, the company said it remains optimistic about the country’s economic fundamentals and is ready to maximise any growth opportunities. It will continue with stringent cost controls and maintain flexibility to adapt to the evolving conditions.

Tokyo Cement reported a turnover of Rs.12,960 million and a profit after tax (PAT) of Rs.664 million for the fourth quarter ending March 31, 2025, compared to a turnover of Rs.13,145 million and a PAT of Rs.722 million in the same period last year. The diminished earnings can be attributed to the price reductions, as the volumes grew by 13 percent in the quarter.

For the financial year ending March 31, 2025, the group reported a turnover of Rs.50,096 million, compared to Rs.49,824 million and a PAT of Rs.3,459 million, against Rs.2,422 million, respectively over the previous year. Despite a 15 percent year-on-year increase in the sales volume, the turnover grew by only one percent, due to widespread price reductions across the industry, aimed at defending the market share in a highly competitive environment. 

The 43 percent rise in PAT reflects the lower margin base of the prior year, further supported by strategic cost savings from optimised sourcing, currency appreciation, lower freight rates and downward trending finance costs.