IT/communication segment grows at Singer despite overall 1Q slowdown

Monday, 13 May 2013 00:06 - - {{hitsCtrl.values.hits}}

The effects of last year’s drought, coupled with consumer fears of an increase in electricity tariffs, had a negative impact on the overall business environment, leading to almost flat revenue growth in the first quarter.

The first quarter saw the Company’s gross sales revenue increase by 2%. However, due to the application of the Value Added Tax regime to the retail sector, net revenue, which is accounted after VAT, decreased marginally compared to the prior year for the Company although Group revenue increased marginally.

However the IT and communications segment did well and revenue grew by 114% compared to the first quarter of the previous financial year. This segment thereby became the Group’s third largest business segment after white goods and consumer electronics. The impressive expansion of Singer Sri Lanka’s communications segment was rooted in increases in the sales of computers by 35%, digital cameras by 25% and mobile phones by a staggering 900%.

The Group’s transport and furniture segments also grew, by 43% and 25% respectively. Decreased revenues were experienced in other segments.

Singer Finance, the Group’s financial services subsidiary, impressed with revenue increasing by 17.5%, although net profit decreased by 22%.

While Singer Sri Lanka maintained its gross profit and restricted selling and administration expenses to 9%, the increase in financial costs negatively impacted profits.

Compared to the first quarter of the 2012 financial year, the net financial cost doubled due to an increase in interest rates by almost 70% and an increase in borrowings. As a result, the Company’s profit decreased by 59% while Group profit decreased by 50%.

Despite these difficulties, the Company was optimistic about the future, considering improved growth in revenue in the month of April, and the prospects of reduced interest rates in the coming months.

The Company has strong fundamentals and outstanding infrastructure, which includes the country’s most extensive retail network, the industry’s most widespread service network, and the widest offering of brands. It remains confident that its unrivalled value proposition will continue to attract Sri Lankans from all across the island.