Rising production costs are eating away at Singer’s profits

The company’s net profit after tax in the second quarter fell to Tk 13.95 crore, 51% lower than the same period a year ago.

TBS Report

July 19, 2022, 9:30 p.m.

Last modification: July 19, 2022, 11:27 p.m.

Infographic: TBS

“>

Infographic: TBS

Singer Bangladesh Limited saw no profit growth in the April to June 2022 quarter as it was unable to adjust its selling prices to rising production costs due to the immense competition in the local market.

The company’s net profit after tax in the second quarter fell to Tk 13.95 crore, 51% lower than the same period a year ago.

According to the latest financial statements of the listed multinational firm finalized at a board meeting on Tuesday, its revenue in the second quarter of 2022 increased by 9.40% to Tk 535 crore, compared to the same period a year ago. Its second quarter revenue is 37% higher than the previous quarter.

But the rising cost of importing raw materials increased the company’s production cost by 15% which could not be fully adjusted with its selling prices and ended up reducing its gross margin by 4% and its operating profit of 21%, compared to the same quarter a year ago, the company said in its financial statements.

Lower plant-level profits, higher year-over-year operating expenses, lower other income and a sharp increase in financial costs affected Singer’s second quarter bottom line, company sources said.

Singer said in its financial statements that the Covid-19 pandemic, the Russian-Ukrainian war, the rise in commodity prices, the devaluation of the taka against the US dollar and the recent flood were among the main causes of its deviation. compared to expected performance in the second quarter of this year.

No Singer official could be reached by phone for comment on its rising costs or revenue growth.

Analysts said that since the second half of 2021, the entire industry has faced rising production costs as all kinds of raw materials become more expensive in the global market.

Singer Bangladesh expects its performance to improve in the coming quarters as the overall economy is expected to improve.

The company’s net asset value per share had declined by 10.81% to Tk 30.34 by the end of June this year.

At the end of the first half of this year, its total revenue stood at Tk 925 crore and profit at Tk 23 crore.

Singer shares closed at Tk 157 each – 1.94% lower from the previous session – on the Dhaka Stock Exchange on Tuesday.

Singer, which initially sold sewing machines and later home appliances, has been in the country for more than a century.

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

The company under the management of its new main shareholder Arçelik – a global appliance player based in Istanbul – is increasing its investments in new facilities and technologies.

In March this year, Singer announced an investment of Tk680 crore aimed at reinvigorating the brand in the booming local market.

Currently, local factories bring in half of Singer’s annual business and the company is aiming for greater localization while exploring export opportunities from Bangladesh, Singer director Cemal Can Dinçer told The Business Standard in march.

Comments are closed.