Singer confident of medium-term growth despite drop in profits in 2013

Wednesday, 5 March 2014 00:35 - - {{hitsCtrl.values.hits}}

Singer (Sri Lanka) PLC sounded an optimistic note as the 2013 financial year drew to a close, looking ahead to strong medium-term growth prospects in spite of a drop in profits in the current year. The Group’s net profit for the year amounted to Rs. 519 million, a decline of 58% from the previous year. Company only profits decreased to Rs. 299 million. However, expressing confidence in medium term growth, Singer Sri Lanka continued to make infrastructure improvements in 2013. For example, the Group continued apace with renovation of existing shops, outlet expansions, and new branch openings. Numbering more than 400 outlets that are situated for maximum customer convenience, Singer Sri Lanka has the island’s most extensive network of stores. It also added new brands and agencies to its portfolio of existing partnerships, which is widely respected as the strongest in the country. Low customer demand was aggravated by the rise in electricity tariffs in 2013 on top of the hike in the prior year and by the imposition of VAT on the retail sector. While gross sales revenue for the retail operation increased by 1.7%, due to the increase in VAT, the revenue which is accounted net of VAT resulted in a decline of 0.6% to Rs. 23.7 billion. Group revenue for the year was Rs. 25.5 billion, representing a 0.2% growth. The implementation of the VAT regime had a similar adverse impact on Group revenue. A positive indicator could be found in the Group’s communications segment, where revenue increased by 80%. Revenues also increased by 9% in the furniture segment and by 6.5% in the agro segment. Revenue for its transport segment also increased marginally. While the environment for sales and collections was challenging, the Group’s outstanding systems and culture have allowed it to out-perform its peers. Singer Sri Lanka was able to leverage its industry-best online real-time ERP system, as well as its call centre service, SMS reminders and more traditional collection drives to ensure that receivables did not go into arrears. These strong underlying fundamentals have placed the Group in a good position to take advantage of improving consumer sentiments in the medium term. Thus, while difficult macroeconomic conditions, including high interest rates and low customer demand continued to impact the Group’s bottom line, there was cause for continued confidence in medium and long term prospects. Considering its reputation for ‘trusted excellence’, as well as its operation of the country’s most extensive retail network, the industry’s most widespread service network, the largest offering of world-class brands, and accolades such as ‘People’s Brand of the Year,’ ‘Youth Brand of the Year’ and ‘Consumer Durables Brand of the Year,’ Singer Sri Lanka looks set to chart a new course of success in the medium term.