Singer (Sri Lanka) PLC announced today its results for the first half of 2017. Despite tough business conditions, the results for the six months ending 30th June 2017, showed a good Revenue growth of 13.6% to Rs. 25.1 billion compared to the same period in the previous year. There was a strong growth in several product categories such as smart phones that grew by 46%, bottle coolers & deep freezers by 32%, televisions by 22% and furniture by 14%.
This is a commendable growth in view of increased Value Added Tax (VAT), higher interest rates and currency devaluation affecting customer purchasing power. The continuous drought in the dry zone and floods in the wet zone hugely affected households in Sri Lanka, 30% of which are dependent on agriculture.
It should be noted that the Consumer Durables industry, where Singer is present is more susceptible to market conditions than other industries. When customer income increases, the demand for consumer durables is above that of the general market demand and when customer income decreases the demand for consumer durables is below that of general market demand. Due to slack market conditions, Singer’s gross margins were reduced to 29% compared to 31% in the previous year. Increased mix of smart phone sales with lower margins also impacted the overall group gross margin. The group was successful in lowering selling and administration expenses from 22.3% last year to 21.3% in the current year. As a result, operating profit had a marginal increase.
Net Finance Cost for the half year increased by 45% to Rs. 956 million largely due to increase in interest rates. As a result, Group Net Profit was Rs. 666.5 million, a reduction of 27% compared to the previous year. In the case of the Company, Net Profit was Rs. 525.5 million, a decrease of 26%.
The company highlighted its key business initiatives for the year are:
• To accelerate the renovation and expansion of existing shops to increase the retail space to cater for additional products and brands (in particular, furniture.)
• The company launched its 4K Ultra HD Television series and plan to launch new series of refrigerators.
• To strengthen and enlarge manufacturing operations with new factories, additional machinery and more advanced technology.
• To expand the Singer credit card that was launched in 2016.
Company Comment
Commenting on the Half Year results of 2017, Asoka Pieris, Group CEO stated, “We are anticipating gradual improvements in the business conditions during the remainder of 2017 and are pursuing strategies to improve margins and lower the costs.”
He also said “I take this opportunity to appreciate the enormous services and guidance given by Late Dr. Saman Kelegama in helping the company to identify trends and evolve strategies based on those trends.” Dr. Saman Kelegama passed away in June.
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