Financial Times

Aircon, mobike sales zoom at Singer
Sales of motorcycles and air conditioners by Singer (Sri Lanka) Ltd., grew at triple digit levels last year but the consumer goods firm warned of a sharp slow down this year as new taxes raise the prices of products beyond the reach of many consumers.

In the published annual review, Chairman Hemaka Amarasuriya said Singer will drive the future market by rapidly expanding its distribution network and easy payment schemes.

Singer almost doubled its revenue over three years with the consumer durable market growing at around 15 percent last year but Amarasuriya warned that new taxes would slow down growth to around a single digit in 2005 and possibly encourage imports through what he called "illegitimate grey channels of entry."

Finance Director Asoka Pieris told a news conference the company's net profit grew 32 percent to Rs 500 million last year while net revenue rose 38 percent to Rs 8.6 billion compared with the year before.

Air conditioners led the way with sales increasing 1,044 percent while sales of motorcycles rose 301 percent followed by washing machines which increased by 110 percent.

Sales of TVs grew by 26 percent, audio/VCD/DVD sets by 67 percent, refrigerators by 27 percent and sewing machines by 16 percent. Pieris attributed sales growth to "aggressive" promotions and selling activities, introduction of new products, especially motorcycles and air conditioners, growth of hire purchase business, and expansion of the distribution network.

Amarasuriya said that in 2004, three categories of products dominated the revenue with a 79 percent share. These were sewing (Rs 1,174 million), consumer electronics (Rs 2,829 million) and white goods (Rs 2,837 million).

In the future, kitchen related products, furniture provided through Modern Homes outlets, and transportation are seen as "Singer's fast emerging categories," he said. Singer is now marketing Indian Kinetic motor cycles.

The Mega channel, now limited to Colombo and the suburbs, will be expanded to cover other cities too while Singer and Sisil shops will be increased to 300 during this year from 250.

In his annual review, Amarasuriya pointed out that the consumer durable market remained "buoyant" for the second consecutive year and that markets across the nation were crowded on shopping days.

Both rural and urban to semi-urban markets reflected the emerging buying power of the average Sri Lankan consumer and demand was widespread across the country, he said.

About 295,000 television sets and 160,000 refrigerators were sold countrywide with the national penetration level being 84 percent for TVs and 37 percent for refrigerators.

Tax increases in the last budget, which included enhanced duty and VAT and the introduction of new levies such as excise and cess on consumer durables, will lead to "stifling" the aspirations of the average Sri Lankan to enhance his or her quality of life, Amarasuriya said.

High taxes historically lead to stimulating grey channels of entry, resulting in lower than anticipated revenue earnings. "Our reading into the future is a waning of the buoyancy recently associated with the durables market and re-activation of illegitimate grey channels of entry," he warned.

Amarasuriya described the placement of Singer as the Most Powerful Consumer Brand in Sri Lanka at the first ever brand evaluation by the independent brand evaluation company, Brand Finance, as "an affirmation of what was known to us for several years."

In value terms, Singer was priced at Rs 2,711 million, which is the third highest brand value. Last year also saw the opening of the newest member in the Singer Group - Singer Finance (Lanka) Ltd. - to support the main company by offering easy payment schemes on the purchase of Singer products.

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