Increased consumption adversely affecting storage operations: Finlays

14 August 2015 06:30 pm - 0 - {{hitsCtrl.values.hits}}

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By Chandeepa Wettasinghe
Cold storage giant Finlays Colombo PLC said that the increased consumption currently taking place in the country has adversely affected its storage operations, while other factors balanced the logistics industry.

“Turnover in the logistics sector was down 9 percent mainly due to lower average occupancy in the Cold Store. The main driver of this was a sustained increase in retail consumption during and after Sinhalese New Year,” Finlays Colombo PLC Chairman C. L. K. P. Jayasuriya said.The consumption has increased as more funds are available to the masses through the cuts in fuel and commodity prices, as well as the increased wages in the public sector given by the current regime.

However, Jayasuriya said that the fall in turnover was recovered through reduced electricity tariffs.

“A reduction in electricity tariffs following elections earlier in the year had a positive impact, and through management of customer mix and space optimization, the impact of turnover reduction was mitigated,” he said.

Under the previous government, cold storage was not recognized as an industry, and therefore was not included in the reduced industrial electricity tariff. Finlays Colombo had been embroiled in lengthy legal proceedings against the Ceylon Electricity Board regarding the matter, and had lost an Appellate Court case last year.

However, there has not been a reduction in general electricity tariffs since the elections, which could signify that cold storage has been recognized as an industry, since the Ministry of Power and Energy action plan under the new regime refers to cold storage as an industry.

The action plan also includes concessionary loans to the cold storage industry to develop renewable energy sources.

Meanwhile, Jayasuriya said that both revenue and profits from tea warehousing has improved over the last year.

This is due to around 40-50 percent of Ceylon Tea not being sold in the Colombo Auctions following economic and political crises in the main Ceylon Tea markets.

“The total logistics sector profit was flat against last year,” Jayasuriya said.

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