Singer Group revenue up but profits drop

Singer ( Sri Lanka) PLC has reported a challenging period for the first half of 2017 with the group’s net profit dipping by 27 per cent to Rs. 666.5 million (compared to the performance of the same 2016 period) though revenue improved by 13.6 per cent to Rs. 25.1 billion by end June 2017.

In a media release, the company said that there was strong growth in several product categories such as smart phones (up by 46 per cent), bottle coolers and deep freezers (up by 32 per cent), televisions (up by 22 per cent) and furniture (up by 14 per cent).

“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 per cent of which are dependent on agriculture,” it said.

Singer said that the consumer durables industry, in which the company 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 per cent compared to 31 per cent 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 per cent last year to 21.3 per cent in the current year. As a result, operating profit had a marginal increase,” the release said. The net profit of the company fell to Rs. 525.5 million, a drop of 26 per cent from the 2016 period.