Categories: Business

Singer March revenues below expectations; expects retail operations to normalise from Sept. quarter

Singer Sri Lanka PLC’s March 2020 top line came in at below the previous year’s levels but reported higher operating profits, possible from reduced selling and administrative costs, as the consumer durables juggernaut failed short of its targets amid the COVID-19 outbreak forced businesses to shutter a couple of weeks into March, hurting all its business lines. Â

Sri Lanka’s largest consumer durables retailer by revenue reported revenues of Rs.12.2 billion for the January-March quarter, down from Rs.14 billion in the year earlier period, as consumer electronics, financial services, furniture, home appliances, IT products, sewing machines and others segments underperformed. Â


Although the group was on its way to near-full recovery from the Easter Sunday attacks-driven business disruptions, subdued consumer sentiments from lower disposable incomes, dampened the demand for consumer durables and the mandatory shutdown of businesses impacted its performance.

This is reflected from the full-year revenues of Rs.54.8 billion, compared to Rs.58.5 billion in the previous fiscal year, with only IT products and sewing machine sales lagging behind.  Specifically, during the quarter under review, the laggards were home appliances and IT products, which were off by at least Rs.390 million and Rs.980 million, respectively, from their previous year’s levels.


The two are the group’s leading product segments by sales. The mobile phone retail business is captured under Singer’s IT products segment and accounts for the lion’s share of its revenue. Singer holds the authorised retail agency for the Chinese-made Huawei mobile phones.Â


The group attributed the low revenue of the segment to the restrictions to Huawei telecommunication equipment, including mobile phones by the US, due to the concerns of alleged national security threats such equipment pose.
Meanwhile, the group’s financial services business, which functions in complimentary to its consumer durables retailing business, by way of providing hire purchase facilities to customers, slightly fell short of its revenue during the March quarter.  The group forecasts negative effects on this segment business until the end of the September quarter (2Q21), due to the disruptions on hire purchase and lease collections.  “The group/company experienced disruption in retail sales, collections of trade debtors, hire purchase collections and lease instalment collections, during this period and likely to continue in 1Q and 2Q, as a result of the anticipated negative sentiments from the macro and micro economic environment,” Singer Sri Lanka said in an earnings release.Â


The group said its retail and manufacturing activities were adversely affected from March 15 to May 10 and does not expect the retail operations to normalise until the September quarter.  Fitch Ratings recently said it could take at least one to one-and-half years before the sector returns to its pre-pandemic levels.Â


In April, Fitch Ratings downgraded Singer Sri Lanka by a notch from ‘A+’ to ‘BBB+’ and left its outlook at ‘Negative’, as worries mounted over its leverage amid disruptions to its business and the pressure on the discretionary spending of the consumers.  Depressed household incomes and length of the restrictions on non-essential imports could determine the sector’s future fortunes.  Meanwhile, the group reported an operating profit of Rs.911.8 million, up 21 percent, from Rs.754.3 million in the year earlier quarter, as selling and administrative expenses were lower by 10 percent.Â


The group also said it managed gross margins across the group, increasing the consolidated gross profit margin to 30 percent, from 27.5 percent in the earlier fiscal year.Â


The group reported negative earnings of Rs.1.1 million for the January-March quarter, compared  negative earnings of Rs.8.5 million in the year earlier period, as Singer Sri Lanka, as a standalone entity, made a loss of Rs.90.2 million during the March quarter, while its other group entities were mostly making positive results.Â


For the full year ended on March 31, 2020, the group made earnings of Rs.75 cents a share or Rs.280.7 million, compared to 67 cents a share or Rs.250.1 million in the previous fiscal year. By March 31, 2020, the Hayleys group held a 90.44 stake in Singer while Hayleys Co-Chairman Dhammika Perera held 1.85 percent separately.


Thanuka

Recent Posts

LNP – Presence of Harini, Vijitha, Tilvin at ABBA Tribute Show clarified

Responding to social media reports criticizing the presence of top NPP members at the ABBA…

4 hours ago

LNP – China reiterates support to Sri Lanka

The Vice Minister of the International Department of the CPC Central Committee (IDCPC), Sun Haiyan…

4 hours ago

LNP – Very heavy rainfall of over 200 mm expected – Met Dept.

The Meteorology Department says the Depression over Southwest Bay of Bengal was located to southeast…

4 hours ago

LNP – A/L candidates affected by bad weather allowed to sit for exams at nearest centres

Candidates facing difficulties are encouraged to contact the Disaster Management Centre (DMC) via the hotline…

4 hours ago

LNP – What players were signed in the IPL 2025 auction?

Rajasthan Royals roped in star Sri Lanka spinner Maheesh Theekshana and Wanindu Hasaranga during the…

24 hours ago

LNP – No electricity tariff revision for this year: PUCSL

The Public Utilities Commission of Sri Lanka (PUCSL) announced that electricity tariffs will remain unchanged…

1 day ago