Singer (Sri Lanka) PLC results for the six months ending June 30, 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 and 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.
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%.
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.”
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