Aitken Spence & Company said September quarter net profit fell three percent to 405 million rupees from a year ago, affected by lower contributions from its Maldivian hotels.

Revenue of the company, a part of the Distilleries group of tycoon Harry Jayewardene, rose 27.3 percent to almost 8.5 billion rupees.

"The contribution from the Maldivian sector has reduced in the second quarter due to refurbishments taking place in the Adaaran Resorts chain," Aitken Spence deputy chairman and managing director J M S Brito said in a statement.

"The impeding global recession and high energy costs have adversely affected the leisure sector further."

The statement said net profit for the first half ending September 30, 2008 went up 4.6 percent 792 million rupees from a year ago while revenue rose 18.6 percent to 14.8 billion rupees.

Aitken Spence’s strategic investment sector, mainly power, continues to be the largest contributor to group profitability, although profit from operations grew only marginally to 1.12 billion rupees in the six months.

A segmental analysis of the group performance indicated that its tourist hotel performance had weakened in the first six months while cargo logistics showed strong growth.

A subsidiary, Aitken Spence Hotels and Resorts, added Hotel Atithi in Puducherry to the group’s portfolio of hotels in India.

Aitken Spence has several hotels in Sri Lanka and presently manages four other resorts in India and four resorts in Oman.

The statement said the company aims to have around ten hotels under its portfolio in South India alone within the next year.

Aitken Spence also secured the agency for Kingfisher Airlines, one of India’s fastest growing private airlines, with flight operations expected to start during the third quarter.

Profits from the cargo logistics business grew to 263 million rupees from 201 million rupees while the contribution from tourism actually fell to 112 million rupees from 253 million rupees.

"Freight rates to and from Colombo to global destinations have contracted by about 40 percent which significantly affects the company’s revenue streams," Brito said.

"Therefore, we would welcome a further depreciation of the rupee to enable shipping agents to generate an income which is marginally above cost."

Brito said the group’s logistics sector sustained growth into the first half of the year, with significant contributions coming from depot-related activities and transportation.

"The sector is embarking on a plan to modernize the container depot and expand the transportation activity."

He also said the group’s South African port operations have expanded its activities by entering into a contract with the National Ports Authority of South Africa (NPASA) to introduce global best practices in marine operations.

Aitken Spence has also started a project on business process re-engineering to increase capacity within NPASA. (LBO)