The company made a net loss of a million rupees in the same period a year ago.
Interim results released by the firm showed that sales for the June quarter fell 6.8 percent to almost 300 million rupees from 322 million rupees a year ago.
The net loss for the first half ending June 30 was 42 million compared with a net profit of two million rupees in the same period a year ago while sales were almost the same at 658 million rupees.
"The company experienced a work stoppage and labour unrest during May and June," Dankotuwa said in a note accompanying the accounts.
"Now this has been resolved satisfactorily."
Dankotuwa's sales suffered in May and June when a strike disrupted manufacturing operations, forcing it to slow down its kilns, reschedule production and delay shipments.
The labour trouble erupted when the management changed a bonus payment scheme and froze the cost of living allowance that it found unsustainable to pay in a high inflation environment.
Inflation hit a record near 30 percent earlier this year although it has now begun to come down.A deal with labour unions with the intervention of the labour ministry helped Dankotuwa resume production. .