Weak Bond Sri Lanka cement firm hit by construction slump

17 Aug, 2009 12:20:37

(LBO) - Sri Lanka's Tokyo Cement Company group said it made a loss of 56 million rupees in the June 2009 quarter compared with a 212 million rupee profit a year ago.

Sales fell 18 percent to 3.2 billion rupees in the quarter from a year ago owing to a slump in construction caused by economic slowdown, the company said in a stock exchange filing.

"The drop in sales is due to continuing sluggishness in the construction industry," the company, a joint venture between Mitsui Mining Company, the largest coal-mining company in Japan, and the local St. Anthony's Consolidated, said.

But it said short-term prospects were better as the 30-year war in the north and east has ended with government forces defeating the Tamil Tigers in May which is seen as reviving economic growth.

"Sales are likely to improve with the revival of the construction industry and opening of the roads to the north," the company statement said.

A new clinker grinding mill commissioned in the eastern port of Trincomalee where it has its plant is geared to meet the anticipated increase in demand.

Tokyo Cement attributed the June quarter loss also to an increase in depreciation charges following the commissioning of the new mill and a biomass power plant.

It said there was an "appreciable increase" in interest due to financing of the new mill and the biomass power plant costing about five billion rupees.