Higher costs cut Singer’s quarterly profit in half

Singer Bangladesh is back on track with increased sales of its popular home appliances and cooling products that helped the company emerge from losses in the January-March quarter.

But rising production and operating costs halved the listed multinational’s quarterly net profit year-on-year.

According to the latest financial statements, Singer’s revenue in the January-March period increased by 4% to Tk 391 crore compared to the same period a year ago, 56% more than its revenue from the start of winter in the previous quarter.

But the rising cost of raw materials and semi-finished raw materials caused its gross profit margin to decline more than 210 basis points year-over-year to 22.5%.

Gross margin is the difference between a company’s revenue and production costs.

No company official returned phone calls for details of cost increases or revenue growth.

However, analysts said that the whole industry, since the second half of 2021, has been facing rising costs as all kinds of raw materials become more expensive in the global market.

Not only were plant-level profits down for Singer, but also a year-over-year increase in operating expenses, a drop in other income, a sharp increase in financial costs all impacted the bottom line. net of Singer in the first quarter.

Net profit after tax in the first quarter fell to Tk 9.12 crore, up from more than Tk 18 crore in the same period a year ago.

Its net profit margin fell to 2.33% in the first quarter of this year, while it earned 4.78% of its revenue as net profit after all expenses and taxes a year ago.

However, the first-quarter performance comes as a relief to Singer shareholders as it did not repeat the previous quarter’s losses that dragged the company’s 2021 full-year profit to a six-year low amid sales and earnings. disruptions in production due to blockages.

The fourth-quarter loss sent the company’s share price on the Dhaka Stock Exchange falling more than 5% in February, but anticipation of a recovery in sales and earnings helped the stock at all costs. retrieve.

On Tuesday, shares of Singer closed up 1.3% at Tk171.9 each.

Singer, which started with sewing machines and later established itself in the home appliance market, has been in the territory for more than a century.

It lost the refrigerator market crown to local competitor Walton in the 2010s – a big decade of home appliance industry localization.

The company led by its new lion shareholder Arçelik – a global home appliance player based in Istanbul – is increasing its investments in new facilities and technologies.

At present, local factories bring in half of Singer’s annual business and aim for greater localization while exploring export opportunities from Bangladesh, Singer director Cemal Can Dinçer told The Business Standard. in March.

Local manufacturing helps companies reduce prices, as the government encourages local factories by charging less taxes and duties.

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