Singer confident of strong growth in second half 2006 despite uncertainty

Singer Sri Lanka, the consumer goods company, says it is looking at strong growth in the second half of this year despite growing uncertainty in the country.

A marked improvement in the supply chain management is envisaged while margins are expected to move up. Concessions from suppliers are being obtained to manage emerging inflationary trends, the company said.

"We look forward to a strong performance in 2006", noted Singer chairman Heamaka Amarasuriya while announcing the company’s results for the first six months of 2006. Amarasuriya said Singer’s strong growth trend continued during this period, recording a 16.5% increase in revenue compared with the same period last year. Revenue increased from 5311 million rupees in the first half of 2005 to 6189.6 million rupees this year.

He said the inflationary spiral that is now in “our midst” hit in mid term, resulting in price hikes accounting for 4.5% of growth, while volume/mix and new products made up the rest. "If not for temporary weaknesses in supply positions, volume growth would have been stronger", he addded in his half-yearly review to shareholders.

During the six-month period, a drop in sales in the Singer retail stores in the northeast was recorded. The company attributes this to the prevailing uncertainty in the region which continues to impact on consumer behaviour.

Amarasuriya said administrative and selling expenses grew at a faster rate than both revenue and gross margins because of expenses incurred in rolling out a new all encompassing E.R.P (Enterprise Resource Planning) system and rapid expansion of the distribution network.

Both these are considered mid to long-term investments that will fuel growth in the coming three years. Just as much as the total revenue has shown a 16.5% growth, the total expenses during the period have also shown an increase of 16.5%. The net profit has shown a decline of 11.9% from Rs 274.6 million in the first half of 2005 to Rs 241.9% this year.

The company said the Singer brand took all the major accolades at the recently concluded 'Power of the People' (POP) Awards presented by the Sri Lanka Institute of Marketing in conjunction with Market Researchers A C Neilson. The brand won the Most Popular Award for all categories as well as for the Durables category. In addition, Singer was awarded the 'POP Teens Award' reflecting the growth of youth support for the Singer brand. "This augurs well for our future," Amarasuriya adds.