Softlogic to manufacture its own electronic goods
View(s):Conglomerate Softlogic Holdings is planning to join other Sri Lankan manufacturers of white (electronic) goods, in producing its own electronic appliances like washing machines, refrigerators and televisions.
Making the announcement in its quarterly results for the period ending June 2021, the company said the decision was made after analysing the competitive advantage in the import substitution industry and the country.
It also said that while demand for PC hardware, software and peripherals have been on the rise during the pandemic, most companies have increased their tech budgets in recent times as they rely on contactless technologies that would help build customer engagement.
Releasing its quarterly earnings review for the period ending June 2021, the company said that with more lockdowns envisaged, businesses have come to realise that having remote access and strong IT system geared for this purpose is unavoidable in the current context of upscaling their business needs. “As such, we see a new trend emerging from SMEs which hitherto never made those investments previously. Work from home (WFH) solutions are also on the rise to maintain productivity levels from WFH employees. Such changes in infrastructure has also brought about a demand for cyber security solutions and a drive to modernise the data centre,” its chairman Ashok Pathirage said in a statement to shareholders, this week which was also released to the media.
As per earnings, the group achieved a consolidated topline of Rs. 24.5 billion, up 73 percent (1QFY21 – Rs. 14.2 billion). Quarterly operating profit was Rs. 2.3 billion (operating loss of Rs. 593 million in 1QFY21).
The group achieved an EBITDA of Rs. 3.2 billion for the quarter (Rs. 303 million in 1QFY21) with an EBITDA margin of 13 percent. These results were achieved against the backdrop of so many external challenges, the statement said.
It said the shortage of US Dollar liquidity in the market hampering opening LCs at the most opportune time, the complexities of re-pricing goods and services in a volatile forex market, the increasing uncertainty accompanied by deficit purchasing power due to the toll of pandemic related-economic consequences and rising cost-push inflation were major setbacks for the economy as a whole.
The top contributors to group revenue were Retail (55 percent), Healthcare Services (20 percent) and Financial Services (19 percent) while IT sector made up 5 percent of group topline. Gross Profit improved 87 percent to Rs. 7.2 billion during the quarter.
“We noticed a spike in demand for televisions, washers, refrigerators and fitness range during the quarter. The positive response of consumer demand for Softlogic’s furniture range encouraged the opening of the second furniture factory which manufactures modular furniture to serve both development projects as well as direct consumers,” the statement said.