Singer Sri Lanka 3Q profits surge on higher sales

• Company seen building its inventory at faster pace

Singer Sri Lanka PLC reported some solid financial performance for the three months ended December 31, 2021 with strong sales and soaring profits reflecting that the consumer durables market has continued to grow at a blistering pace.  

However, the company was seen gradually building up inventories which rose by a third of what it had at the start of the financial year and by over Rs.10 billion from the year earlier period. 

This is perhaps a tactic by the company to ensure it has adequate stocks of white goods it retails and manufacturers in house by navigating potential tightening of import controls.

Fitch Ratings fortnight ago said the sector could languish in 2022 from the weaker consumer sentiments, lower disposable incomes amid acceleration in inflation and the potential for further tightening of import controls amid foreign currency crunch.

However, Singer Sri Lanka reported revenues of Rs.23.79 billion for the three months to December, logging 28 percent growth from the corresponding period in 2020.

Sales were seen rising across its portfolio, except its IT products division, but even that reported higher profits.
As a result, Sri Lanka’s largest consumer durables retailer reported earnings of Rs.1.80 a share or Rs.2.03 billion compared to earnings of 74 cents a share or Rs.834.69 million reported in the same period in 2020.

For the nine months through December 2021, the group reported earnings of Rs.2.71 a share or Rs.3.05 billion compared to earnings of Rs.1.50 a share or Rs.1.69 billion in the corresponding period in 2020.
The nine months sales were Rs.55.39 billion, up 12 percent.

Singer Sri Lanka share ended at Rs.23.20 last Friday, losing 30 cents or 1.28 percent.
The group took on new borrowings during the nine months and nearly all of the new financing went into add inventories.

The group had an inventory of Rs.24.17 billion by December-end, compared to Rs.18.18 billion on March 31, 2021 and Rs.13.98 billion on December 31, 2020.

It took on Rs.6.3 billion worth new loans in the nine months.  
The group’s home appliances division, the largest segment in its product portfolio, generated revenues of Rs.8.48 billion in the nine months to December 2021 compared to Rs.5.06 billion in the same period in 2020.
The group’s finance company subsidiary also did well at the top line and operating profit levels.

Hayleys group with its subsidiaries held 90.42 percent stake in Singer Sri Lanka as at December 31, 2021, while the Hayleys majority owner Dhammika Perera has another 1.85 percent stake in the company.