Singer Sri Lanka 4Q profits soar amid strong sales, lower finance costs

Singer Sri Lanka PLC reported soaring profits for the three months ended in March 2021 (4Q21) as consumers splurge on home appliances, electronics, smartphones and laptops as they went on a shopping binge in search of items to upgrade their kitchens, living rooms, and setting up home offices in the new setting necessitated by the pandemic.

The consumer durables juggernaut reported earnings of Rs.761.9 million or 68 cents a share for the January – March 2021 quarter compared to a loss of Rs.1.1 million in the same period in 2020.

The group generated revenues of Rs.18 billion for the three months, up by a robust 48 percent from the same period last year on a burst in consumer spending, which uplifted almost every sector in the economy in the first three months of the year before the implementation of new mobility restrictions.

As a result, the sector outlook suddenly turned dour soon after the traditional New Year, and the consumer durables players are now contending with the new reality by aggressively turning into e-commerce to keep the sales going. 

The massive jump in profits was also a result of the group paying down a sizeable amount of loans during the financial year ended in March 31,2021 and the record low interest rates, which drove down finance costs.  The financial reports showed that the group had shed as much as Rs.11.71 billion loans during the financial year, as it was cutting its massive debt pile which was weighing heavily on earnings. The group’s debt/equity ratio fell to 3.37 by March-end from 5.32 a year earlier. 

As a result, the net finance cost slumped to Rs.339.9 million in the quarter from Rs.784.9 million in the corresponding period last year.

The leader in consumer durables retailing saw its sales across all business vertices coming off stronger in the quarter under review than a year ago. Home appliances did Rs.6.1 billion in sales compared to Rs.3.8 billion in the same period last year while consumer electronics divisions generated sales of Rs.2.1 billion compared to 1.9 billion a year ago. 

IT products, which mostly consist of smartphones and laptops, generated sales of Rs.4.8 billion, up from Rs.3.5 billion in the same period last year as people heavily moved online for work, education and entertainment.  

The group’s furniture sales rose to Rs.925.2 million in the quarter from Rs.512.3 million a year ago. Meanwhile, the sales of group’s namesake sewing machines doubled to Rs.1 billion. The group’s finance company, which also supports the parent company’s sales via facilitating hire purchase sales did well on top line but its profits fell. 

For the year ended in March 31, 2021 (FY21), the group reported earnings of Rs.2.18 a share or Rs.2.5 billion, significantly up from earnings of 25 cents a share or Rs.280.7 million. The full year revenue rose by 23 percent to Rs.67.4 billion. 

As at March 31, 2021 businessman Dhammika Perera- controlled Hayleys group held 90.42 stake in Singer while Perera held 1.85 percent stake separately.