Singer furniture factory at Horana BoI soon
View(s):Singer Sri Lanka PLC (Singer) has secured a 10-acre land at the Horana Board of Investment (BoI) zone to expand its furniture manufacturing, top officials said.
“This year the company wants to accelerate the renovation and expansion of our existing shops to increase the retail space to cater to our additional products and brands (in particular furniture) to strengthen and enlarge our manufacturing operations with new factories, additional machinery and more advanced technology,” Asoka Pieris, told the Business Times. He said that Singer negotiated with the BoI and has secured this land to set up a factory. Singer’s furniture business grew around 6 per cent as a total percentage of the furniture market, he said but the company is comparatively new in this business – hence the scope to expand. From last year to this year, this business grew by 22 per cent for the company. Singer Sri Lanka has its furniture production facility in Piliyandala while the Regnis and Singer Industries manufacturing facilities are located in Ratmalana.
Mr. Pieris added that recent drought conditions, combined with the currency devolution, increased value added tax (VAT) and higher interest rates – all contributed to the early part of 2017 experiencing less buoyant trading conditions than recent years. During Q1 2017, Singer chose not to pass on the full impact of the increase in VAT and weaker currency to customers. “This reduced gross margins to 29.1 per cent compared to 30.6 per cent last year in Q1 2016. The increased mix of smartphone sales in 2017, which have lower margins, also impacted the overall group gross margin.”
The lower margins and higher interest both impacted group profitability for the quarter under review. Group net profit for Q1 2017 was Rs. 246.6 million, a reduction of 33 per cent compared to the prior year (excluding the one-time gain in Q1 2016) The company’s net profit for the first quarter was Rs. 319.6 million, an increase of 49 per cent.
Mr. Pieris added that the biggest impact for the company last financial year was the drought. “The number of households in agriculture is 30 per cent against a percentage of the GDP, so it was 30 per cent of consumer demand that’s wiped off for Singer during the last quarter. Hopefully this drought condition will not prevail this financial year,” he said noting that last year’s 13 per cent growth for the group is good considering the tough conditions.
“We look forward to the transient weaker trading conditions gradually improving during the remainder of 2017 and we remain confident that our key business initiatives will continue our impressive revenue and profit growth trajectory.” Expanding the Singer credit card that was launched in 2016 is also on the cards, he said.