Tokyo Cement Group (Tokyo Cement) reported its financial performance for the fourth quarter ending 31st March 2022, with a turnover of Rs. 16,158 million reflecting year-on-year growth of 31%, compared to Rs. 12,373 million during the same period last year.
Despite turnover growth, Tokyo Cement’s sales volumes reduced by 11% compared to the fourth quarter of last year, due to a plant breakdown at one of the grinding mills and the unavailability of raw materials. The Group recorded an Rs. 2,531 million losses for the fourth quarter, of which the largest contribution came from exchange losses that amounted to Rs. 4,822 million.
The Group’s year-on-year performance comparison against the previous financial year reflects the impact of significant increases in the cost of goods and shortages of raw materials due to USD illiquidity in the market. Sales volume of Tokyo Cement showed a marginal increase of 1% for the financial year, whilst turnover saw year-on-year growth of 22%, from Rs. 42,962 million to Rs. 52,477 million.
The Group recorded a loss of Rs. 453 million for the FY 2021/22, with the exchange loss standing at Rs. 5,050 million for the year.
During the quarter prices of all construction materials spiked sharply, reflecting the highly volatile macroeconomic environment. Raw material costs increased in line with global price surges, compounded by increasing freight rates due to rising oil prices, and interest for longer credit periods of 180 days. In addition, constraints in establishing Letters of Credit (LCs) gave rise to material shortages. The price of a 50kg bag of cement was adjusted to reflect these cost increases accordingly,
An important factor to note is that the cement industry imports its raw materials on 180-day Letters of Credit (LC) as per the CBSL requirement. Therefore, the material that was received in October 2021, was manufactured and sold at an exchange rate of Rs. 203/- incurs a significant exchange loss when settled in April 2022 at the current rate of Rs. 365/- to the USD.
Tokyo Cement has taken many proactive measures to minimise the impact of possible contractions to the economy on the Group’s performance. Anticipating a challenging environment, the Group has reforecast demand, rescheduled sourcing and production plans, and adjusted cash flows accordingly.
The Group has deployed drastic cost-saving measures, streamlined operations, and postponed capital expenditure. While the short to medium-term economic landscape remains uncertain, Tokyo Cement has a proven track record of resilience and resurgence and is committed to rebuilding the nation, stronger than ever before.