Inflation bites Singer in Q3
To cope with soaring inflation, consumers have tightened their purse strings – they now spend mostly on essentials rather than household appliances. This is why Singer Bangladesh Limited was unable to meet the planned sales target resulting in a loss of Tk 8.50 crore in the July-September 2022 quarter.
The multinational electronics and appliance company cited in its unaudited quarterly financial statements that Russia’s invasion of Ukraine has reduced prospects for a post-pandemic recovery. Economic activities remained depressed, with shocks in freight, energy and food prices continuing to have negative effects. These were further fueled by the significant depreciation of the taka against the US dollar.
But the significant increase in costs could not be adjusted with the selling prices. The competition was not supporting the large-scale price increase as competitors were not responding as expected, the report also said.
As a result, the company lost more than 5% in gross margin, resulting in a loss in the third quarter.
In July-September, Singer’s revenue increased by 13% to Tk 517.67 crore, but its cost of sales and financial costs increased significantly by 21% and 46% year-on-year. As a result, he suffered a loss.
Meanwhile, the company has been under pressure since the beginning of this year due to increased business expenses. Thus, in the first nine months of this year, its net profit fell by 76% to Tk 14.57 crore despite a 9% increase in sales, according to the company’s financial statements.
Again, the company’s sales rose in chunks because high inflation eroded people’s purchasing power. As a result, the company’s debts with customers increased by 55%.
The company is also suffering from a net operating cash crisis due to rising raw material import costs, which has led to an 80% increase in its short-term bank loans to 834,000,000. Tk compared to the previous year.
And its net asset value per share fell 13% to 29.53 Tk.
For the same reason, Walton’s earnings also fell 26% in FY22. In addition, the company is also suffering from a net operating cash crisis due to rising costs.
Singer was listed on the Dhaka Stock Exchange in 1983. Following the divestment of the Dutch founding family, Singer came under the control of its Turkish acquirer Arcelik in 2019.
The company’s share price now remains stuck at the floor price of Tk 151.90 on the Dhaka Stock Exchange.
Meanwhile, Singer has started construction of its state-of-the-art manufacturing plant by investing Tk 800 crore in Bangladesh Special Economic Zone at Araihazar, Narayanganj.
Arçelik’s commercial director, Cemal Can Dinçer, said Singer aims to manufacture 90% of its products locally, up from 52% currently. The company would also help develop local suppliers for the electronics and home appliance industry.