Warehousing profits help Sri Lanka’s Asia Siyaka offset brokerage decline
ECONOMYNEXT – Improved use of its warehousing, which was doubled in recent years, has helped Sri Lanka’s Asia Siyaka Commodities offset a fall in its tea brokering business last year.
“In recent years, we have sought to diversify our earnings streams in order to reduce exposure to relatively volatile broking business,” managing director and chief executive Anil Cooke said.
The company has focussed on driving growth in its warehousing operations with initiatives launched to optimise warehousing capacity including broadening the customer base and increasing market penetration by getting new customers, he said.
As a result, capacity use at the warehouse increased to 93.5 percent and revenue generated rose to 34 percent of consolidated revenue in 2018-19, compared to 28 percent the previous year.
Asia Siyaka Commodities reported net profit rose 16 percent to 113 million rupees in the 2018-19 financial year although total sales fell 1.8 percent to 771 million rupees
Cooke told shareholders in the firm’s annual report that the decline in tea prices and export volumes had a direct impact on its broking business, with revenue declining by 12 percent to 269 million rupees.
Brokerage income fell to 35 percent of total revenue, from 39 percent the year before.
Sales generated from the group’s warehousing operation increased by 13 percent to 247 million rupees during the year supported by better utilisation levels as the group sought to diversify its customer base.
“Following the commissioning of our second warehousing facility two years ago, the group has successfully doubled its storage capacity and positioned itself as a dominant force in this industry space,” Cooke said.
The group’s consolidated operating profit contracted marginally by two percent to 296 million rupees reflecting the decline in revenue.
Brokerage business generated an operating profit of 230 million rupees, down six percent while earnings before interest and tax from warehousing grew by eight percent to reach 94 million rupees.
(COLOMBO, 06 Sep, 2019)