Filtered Press Release : 2023 Aug
Tokyo Cement Group Scores Platinum and Gold Awards at Prestigious CIOB Green Awards 2023
Tokyo Cement Group receiving the Platinum Award for Sustainable Leadership in the Construction Industry for its Renewable Energy Generation Programme Tokyo Cement Group won two prestigious awards that reinstate its industry leadership position at the Annual Green Awards 2023 event, organized by the Ceylon Institute of Builders (CIOB). Tokyo Cement Group won the apex Platinum …
Tokyo Cement Group receiving the Platinum Award for Sustainable Leadership in the Construction Industry for its Renewable Energy Generation Programme
Tokyo Cement Group won two prestigious awards that reinstate its industry leadership position at the Annual Green Awards 2023 event, organized by the Ceylon Institute of Builders (CIOB). Tokyo Cement Group won the apex Platinum Award for Sustainable Leadership in the Construction Industry in recognition of its Renewable Energy Generation Programme which makes its entire local cement manufacturing process 100% energy independent. The Gold Award in the category was won by Tokyo Supermix (Pvt) Limited; Tokyo Cement Group’s Ready-Mix Concrete (RMC) business unit, in recognition of the comprehensive Wastewater Recycling System implemented across its island-wide RMC plants network. These two awards are the most recent seals of approval received by the Tokyo Cement Group honouring its industry-defining and commendable commitment to sustainability.
Hon. Dinesh Gunawardena, Prime Minister of Sri Lanka was the Chief Guest at the event which culminated during the World Construction Symposium, and was also graced by Hon. Susil Premajayantha, Minister of Education, and Hon. Suren Raghawan, State Minister for Higher Education as Guests of Honor. The distinguished guests at the event were lead by Dr. Rohan Karunaratne – President, and Eng. Saliya Kaluarachchi – Hon. Secretary of the Ceylon Institute of Builders among other prominent industry stalwarts. The CIOB, the premier professional organization of building and construction professionals in Sri Lanka together with University of Moratuwa (UOM) organized this year’s flagship awards ceremony for the 11th consecutive year.
Tokyo Supermix receiving the Gold Award at the CIOB Annual Green Awards 2023
The Annual Green Awards is a platform to encourage environmentally conscious business practices by evaluating remarkable sustainability efforts in the Sri Lankan construction industry. This year, the eminent panel of judges were headed by Prof. A.K.W. Jayawardane as the Chairman and comprised of Prof. Chitra Weddikkara, Dr. Tissa Meepe, Dr. Ashan Asmone and Eng. Saliya Kaluarachchi as committee members.
Tokyo Cement Group, as Sri Lanka’s largest manufacturer of cement, concrete, and cement-based innovative products, has won multiple accolades in recognition of its standard-setting sustainability practices. Adding to the many awards received over its forty-year history, earlier this year Tokyo Cement also won the Gold Medal in the Chemical Industries Category at the Presidential Environmental Awards 2021-22 organized by the Central Environmental Authority (CEA). This stands proof of Tokyo Cement’s unwavering commitment to enrich and conserve the environment by making Sustainability a key business priority.
Tokyo Cement Group, as the industry leader, has made several strategic investments to minimize its environmental footprint. First among them is its highly admired renewable biomass energy programme. The Group pioneered biomass energy generation in Sri Lanka to promote greater national energy security with a total installed capacity of 24MW. The Group also exports up to 8MW of biomass and Dendro power and 600kW of solar power to the grid, thereby increasing the national renewable energy contribution. This green energy programme engages nearly 2,500 farming families, via direct and indirect employment, who have so far planted more than 7.5 million Gliricidia trees contributing to the Group’s collective sustainability efforts. By operating a community trade supply chain with the local farmers to source biomass fuel, the Group retains a major portion of the energy bill within the country instead of spending it on imported fossil fuels, whilst enabling critical cashflow to the rural economy.
The contributing reduction of carbon impact by Tokyo Cement is further attested through the Company’s distinguished product brand TOKYO SUPER Cement, which has won both the Green Mark® (Singapore) Certification from the CIOB, and the GREENSL® Labelling System Certification from the Green Building Council of Sri Lanka (GBCSL), making it the Greenest Cement in the market.
Tokyo Supermix received the Gold Award at the CIOB Green Awards 2023 for its comprehensive wastewater recycling system which allows to reuse 90% of the water used daily for aggregate wetting, concrete mixing, and to wash inbuilt tanks after unloading mixer trucks at all RMC plants across the island. Out of the large volume of water recycled through the system annually, approximately 12 million liters is reused in concrete mixing while the remainder is used in the washing process in a close-looped cycle, significantly reducing its environmental footprint. The entire waste management programme deployed by Tokyo Supermix also takes care of waste concrete and cement sludge, and the concrete samples used for quality testing are recycled to produce Reef Balls that are used in Tokyo Cement’s Coral Reef Restoration programme.
Furthermore, Tokyo Cement Group leads several highly impactful, science-based conservation efforts that include Mangrove Reforestation, Coral Reef Restoration, and a Native Forest Tree Propagation programme among others as part of its sustainability drive. Whilst the Group’s promise on sustainability comes to life through these far-reaching initiatives, Tokyo Cement has earned the reputation as the most trusted supplier of high-quality cement, concrete and cement-based innovative products in Sri Lanka. By successfully integrating social welfare and environmental conservation into its mission to enrich the country, its people and the environment, Tokyo Cement Group has reaffirmed its position as the leading partner in Nation-building.
Tokyo Cement Group’s FY24 Q1 Performance Signals Stable Market Momentum
Quarterly Financial Review Tokyo Cement Group (Tokyo Cement) reported its financial performance for the first quarter ending 30th June 2023, with a turnover of Rs. 12.02 billion reflecting a year-on-year decline of 26%. Contraction in turnover can be attributed to a minor drop in volumes and a reduction in the price of a 50kg cement …
Quarterly Financial Review
Tokyo Cement Group (Tokyo Cement) reported its financial performance for the first quarter ending 30th June 2023, with a turnover of Rs. 12.02 billion reflecting a year-on-year decline of 26%.
Contraction in turnover can be attributed to a minor drop in volumes and a reduction in the price of a 50kg cement bag. In the corresponding period of the previous year, the price of a 50kg cement bag was increased from Rs. 2,350/- to Rs. 3,000/-, whilst in the quarter under review the price of a 50kg cement bag was reduced from Rs. 2,750/- to Rs. 2,600/-. As of this article, the price of a 50kg cement bag has been further reduced to Rs. 2,300/- as the Group continues to pass on any raw material price reductions or exchange gains to the consumer.
The Group recorded a Profit After Tax (PAT) of Rs. 865.1 million for Q1 FY 2023/24, compared to a PAT of Rs. 534.8 million in the corresponding period of FY 2022/23. This year-on-year increase in profits can be mainly attributed to the fact that there was no exchange loss in the quarter under review as a result of the Rupee appreciation, whereas a Rs. 3.18 billion exchange loss was incurred in Q1 FY 2022/23.
Whilst interest rates have increased overall in the corresponding quarters, the removal of exchange loss allows a positive impact on the reported Finance Expenses. Meanwhile, the introduction of the Social Security Contribution Levy (SSCL) and salary adjustments were the main contributors to the substantial increase in Administrative Expenses during the quarter under review.
The Economic Environment
Over the course of last year, the high volatility of the foreign exchange market posed the greatest threat to the business environment. However, the fiscal controls deployed by the Central Bank of Sri Lanka (CBSL) have started to yield results, whereby the Sri Lankan Rupee appreciated by 22.9% against the US Dollar during the year up to 31st May 2023. In Q1 FY 2022/23 the Rupee depreciated to a peak of Rs. 398/- to the USD, whilst in Q1 FY 2023/24 the Rupee appreciated to a year-on-year low of Rs. 298/- to the USD. This currency appreciation allowed for a reduction in the costs of imported goods. A decrease in global raw material costs, and freight rates resulted in a further cost benefit that was passed on to the consumer via price reductions across a wide range of commodities.
Even though commodity prices reduced consecutively during the quarter, the higher-than-expected interest environment prevented a tangible impact being made on overall prices of goods and services. The rate of inflation as measured by the year-on-year change in the Colombo Consumer Price Index (CCPI, 2021=100) decreased consecutively from 50.3% in March 2023 to 35.3% in April and to 25.2% in May 2023.
Consequently, the CBSL started to systematically relax some of the fiscal restrictions that were put in place to curb forex exposure, indicating the slow yet steady recovery of the national economy. To further encourage domestic cash circulation the CBSL announced a reduction of the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 250 basis points to 13% and 14%, respectively in June 2023.
All markets operated with relative cautiousness whilst consumer demand remained subdued due to limitations in disposable income, and high lending rates prohibiting borrowing for construction. Indicative of this market skepticism, the construction industry continued to remain stagnant, with the cement industry estimated to have utilised approximately a third of its overall installed capacity.
Whilst being able to attract substantial FDI between January to March of 2023, the country was able to secure a USD 350 million from the Asian Development Bank and USD 700 million from the World Bank, for budgetary and welfare support. These essential financial stimuli are expected to stabilise the economy further whilst Sri Lanka continues to engage in negotiations with both bilateral and private creditors on debt restructuring.
Outlook
The economy is anticipated to gain positive traction with the interest rates trending downwards, thus encouraging borrowing to expand domestic cashflow. The resulting invigoration of economic activity is expected to accelerate demand in the construction industry. This is to be further bolstered by the removal of import restrictions imposed on several housing and construction-related products from the beginning of the second quarter. The combined effect allows for greater price reductions and will encourage construction projects that were halted due to cost constraints and non-availability of materials. Gradual recovery of the construction industry, however, is largely dependent on the recommencement of government backed projects expected later in the year. Whilst an overall quarter-on-quarter demand reduction is recorded, there is a considerable boost in demand from May 2023 onwards compared to last year, indicating a shift in momentum.
Meanwhile, the Group resumed the upgradation of one of its cement grinding mills that would increase overall cement production capacity from 3.1 million MT to 4 million MT per annum. The upgrade includes deployment of the latest technologies in the grinding facility that would increase efficiencies, thereby reducing production costs. In addition to improving productivity, this will update the Group’s local manufacturing process to stay abreast with global standards in quality and sustainability.
Whilst taking a conservative outlook for the short to medium term, Tokyo Cement remains optimistic of slow but steady growth in the wake of improving economic fundamentals. The Group will continue the stringent cost control measures already in place to weather the impact of the economic downturn. With the stabilisation of the currency, the slowdown of inflation and reduction in interest rates, as signalled by the CBSL, the Group is cautiously hopeful of a recovery in the coming years. The Tokyo Cement Group remains agile to the changes in the environment and stands ready to be an active participant in the country’s efforts to reignite the economy.
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Published: 11th August 2023, Colombo.
