Financial Times

Sewing machine sales in 2005 highest on record
Singer joins Rs 10 billion club
Singer, Sri Lanka’s most powerful brand, recorded a Rs 10.9 billion turnover for calendar 2005, a 26.1 percent increase against Rs 8.6 billion in 2004, the company said.

The company’s post tax profit for the period was Rs 500.6 million compared to Rs 500.3 million reported in 2004. The company’s earnings per share remained almost stable in the two consecutive years at Rs 9.90 and Rs 9.99, respectively.

Sales growth was dominated by sewing machines, consumer electronics, refrigerators, and furniture and motorbike product lines during the year. Sewing Machines recorded sales of over 70,000 units during the year — an all time high in the company’s 129-year old history, the company said.
The transportation category contributed Rs 700 million in turnover. During the year one of the milestones achieved was clinching a Sole Distributorship Agreement with the Indian Motor Cycle giant “Kinetic”.

The statement said Consumer Electronics growth was supplemented by a range of newly emerging products such as DVD, Home Theatre, Satellite TV and Home Security Systems. Satellite TV contributed Rs 3.1 billion in revenue. The introduction of an exclusive Channel for Furniture under the brand “Modern Homes” resulted in rapid growth. Despite being impacted by pricing due to high taxes, refrigerators recorded the highest revenue amongst all sectors. Communications revenue increased with the roll of Personal Computers across the distribution network

Finance costs showed a sharp increase over the earlier year with Rs 425.8 million compared to Rs 299 million. Administration and selling expenses was Rs 2.3 billion compared to Rs 1.7 billion with the sharp increase in these expenses sidelining the company’s turnover growth momentum to remain static in its bottom line performances. Singer also recorded remarkable profits from its associates companies. The company’s share of associate company profits, before tax, increased to Rs 93.3 million against Rs 15.3 million in 2004. The associate companies’ profits increased due to an exceptional performance at Commercial Leasing Co. and Commercial Fund Management (Pvt.) Ltd.
Singer Group chairman Hemaka Amarasuriya, commenting on the performance and the future outlook of the company, said that “Brand building is a key function of the company. As a leading retailer with a multi-faceted brand platform on offer, catering to several socio-economic groups of customers, brand sustenance becomes an important goal of the company in order to sustain continued growth”

Commenting on brand building and the future of Sisil brand, he said
“This year will be dedicated to building the ‘Sisil’ brand. Once a market leader in refrigerators we acquired ownership [of this brand] in 2001. The brand has been successfully extended to Washing Machines and a range of small home appliances with a substantial revenue contribution. A decision was made to expand the number of Sisil branded shops in 2006 thereby complementing the brand with a substantial retailing position. One of Sri Lanka’s best known heritage brands, we will develop Sisil as a brand icon.” Singer was adjudged “The Most Powerful Brand of the Year” for the second consecutive time by Brand Finance International and also as the “2nd Most Valuable Brand in Sri Lanka”. Singer and Singer Mega are among the chosen Super brands of Sri Lanka. Mr Amarasuriya also emphasised the need to tighten the finance and operations costs. Inventories increased in correlation to the advent of new products, while Receivables too increased to match revenue growth. As a result, finance costs grew faster than expected containing profit growth. Steps have already been taken to better manage operational cash flows, he said.

The company declared a 25 percent first and final dividend for 2005 subject to the approval of shareholders at the annual general meeting. It also declared a bonus issue of 1 for every 4 shares held. This announcement received positive sentiments in the market moved the company’s share price on the Colombo Stock Exchange on March 3 to Rs 85 from its traded price of Rs 77 per share before the announcement.

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