Singer (Sri Lanka) Plc has increased Group revenue by 13.7% to Rs. 12 billion in the first quarter while the bottom line saw contraction.
Group net profit for the first quarter was Rs. 246.6 million, a reduction of 33% compared to the previous year (excluding the one-time gain recorded in the first quarter of 2016). For the Singer (Sri Lanka) company only, net profit in the first quarter increased 49% to Rs. 319.6 million, mainly due to dividends from subsidiaries.
Singer said there was growth in turnover despite sluggish consumer demand resulting from the drought affecting the income of about 30% of agriculture-based households in the country, combined with escalating prices due to devaluation and an increase in VAT.
Traditional and thrust product lines of the company experienced good growth - in smart mobile phones by 56%, televisions by 27%, deep freezers and furniture by 22% each and computers by 18%.
During the first quarter of 2017, Singer chose not to pass on the full impact of the increase in VAT and weaker currency to customers. This reduced gross margins to 29.1% compared to 30.6% last year. The increased mix of smartphone sales in 2017, which have lower margins, also impacted the overall group gross margin.
The net finance cost for the first quarter of 2017 increased 45% to Rs. 434 million. The lower margins and higher interest both impacted group profitability for the quarter under review.
Subsidiary Companies Regnis (Lanka) Plc had a profit of Rs. 86 million and Singer Industries (Ceylon) Plc had a profit of Rs. 9.4 million. The revenue of Singer Finance (Lanka) Plc increased by 27% although net profit decreased due to higher financing costs, the initial cost of credit card operations and the impairment of replaced ERP software programs.
The company mentioned that its key business initiatives are:
* To accelerate the renovation and expansion of existing shops to increase the retail space to cater to additional products and brands (in particular furniture).
* To strengthen and enlarge manufacturing operations with new factories, additional machinery and more advanced technology.
* To expand the Singer credit card which was launched in 2016.
Commenting on the 2017 first quarter results, Group CEO Asoka Pieris stated: “We look forward to the transient weaker trading conditions gradually improving during the remainder of 2017 and we remain confident that our key business initiatives will continue our impressive revenue and profit growth trajectory.”
The Singer (Sri Lanka) Group is the largest retailer, financier and manufacturer of consumer durables in Sri Lanka. The company has 422 retail stores as well as an e-commerce platform. The company also serves over 2,800 dealers and sub-retailers. Renowned for its after-sales service, the company has 14 service centres and over 300 service agents. Apart from its house brands, the company is a distributor of many well-known brands.
Singer commenced business in Sri Lanka in 1877 and is 71.2% owned by Retail Holdings (Sri Lanka) B.V (a Netherlands company) and the shares of the company are publicly traded at the Colombo Stock Exchange.