The Singer Group announced results for the nine months ending September 30th 2017 with revenues increasing to Rs. 37.0 billion, an increase of 12% compared to the same period last year, demonstrating resilience by growing competitively and consistently in tough market conditions.
During the quarter a major milestone occurred with the majority shares of Singer (Sri Lanka) PLC being purchased by Hayleys Group from Retail Holdings (Sri Lanka) B.V., thus making Hayleys the new parent company of the Singer Group.
Both companies together have ensured a smooth and seamless transition where Singer will continue to pursue its programmes and strategies to retain its market leadership in consumer durables. Additionally, synergies with Hayleys and its associate companies augurs a brighter future for the Singer Group and its stakeholders.
Group Net Profit for the first nine months was Rs. 789.2 Million, a reduction of 37% compared to the prior year (excluding the one-time gain during first nine months of 2016). Operating Profit decreased marginally to Rs. 2,874 Million from Rs. 2,966 Million compared to the previous year.
Company Net Profit also decreased 32% for the first nine months to Rs. 544.9 Million. The third quarter was largely affected due to a reduction in harvesting incomes. As a result, the third quarter revenue increased at a slower pace of 8%.
Net Finance Cost for first nine months of 2017 increased by 44% to Rs. 1,494 million largely due to an increase in interest rates. The lower margins and higher interest rates have both impacted group profitability.
Challenging market conditions, notably the continuous drought in the dry zone, reduction in customer purchasing power due to currency devaluation, increased value added tax (VAT) and higher interest rates and floods in the wet zone contributed to the decrease in the demand for consumer durables.
As a result of the adverse conditions, the company too could not increase prices, and gross margins reduced to 29% in the first nine months compared to 31% last year. The increased mix of smart phone sales, which have lower margins, also impacted the overall group gross margins.
However, the group was successful in lowering selling and administration expenses from 22.6% last year to 21.7% in the current year.
The company is anticipating gradual improvements in the business conditions during the remainder of 2017 and in 2018 while pursuing strategies to improve margins and lower costs.
Ongoing noteworthy key initiatives include;
- Growing e-commerce business to supplement retail business.
- Growing furniture business exponentially with a wider range available to customers showcased in larger showrooms.
- Accelerating the renovation and expansion of existing shops to increase retail space catering to additional products and brands including the furniture range.
- Launch of the 4K Ultra HD Television series and new smart refrigerator range.
- Strengthening and enlarging manufacturing operations with new factories, additional machinery and state-of-the-art technology.
Commenting on the results, Asoka Pieris, Group CEO said, “Despite the first nine months of 2017 being challenging mainly due to tough market conditions, we believe that we have come out strongly. Hayleys as the parent company is also an excellent strategic fit for Singer and we are excited about the growth prospects.”
Commenting on the outlook, Mohan Pandithage, Group Chairman said, “As the Company’s major shareholder, Hayleys Group is confident that Singer’s position as the leading consumer durables retailer will be further strengthened. The synergies that would arise by the combined strength of the two corporates would take Singer Sri Lanka to greater heights.”
About Singer (Sri Lanka) PLC
Singer (Sri Lanka) Group is the largest retailer, financier and manufacturer of consumer durables in Sri Lanka. The company has 424 retail stores as well as an e-commerce platform. The company also serves over 2800 dealers/sub retailers. It is also renowned for its after-sales service network with 14 service centres and over 300 service agents. Apart from its house brands, the company is a distributor for many other well-known brands.
Singer commenced business in Sri Lanka in 1877 and is 61.73% owned by Hayleys Group. Shares of the company are publicly traded on the Colombo Stock Exchange.
Additional financial and other information about the Company may be found at the Corporate/Investor section of the Company’s website: www.singersl.com.