Sales of sewing machines still strong
Believe it or not – the sewing machine still has a strong household market and the sewing culture is still vibrant. "We believe that every housewife still aspires to own or upgrade a sewing machine," says Singer Industries (Ceylon) Ltd Chairman and Managing Director, Hemaka Amarasuriya in the company's 2006 Annual Report, explaining why the Consumer Sewing Machine market remains strong, despite increasing availability of readymade apparel off the peg. "Uses may vary from darning, mending and altering to hobby sewing and stitching for self-employment."
Amarasuriya further says that in developed countries, the 'empty nest' syndrome left behind by married children leaving home provides opportunities both in time and space for a mother to enhance her self-esteem by sewing for her grandchildren. "Consumer sewing markets in developed countries currently indicate double digit annual growth with emerging markets following trends." Singer's net revenue for 2006 increased to Rs.792.4 million from Rs.747.2 million the previous year, an increase of 4.7%. The Sewing machine net turnover for 2006 increased to Rs.757.8 million from Rs.657.6 million in 2005, an increase of Rs.70.2 million or 10.2%. Gross profit for the year was Rs.52.5 million compared with Rs.75.3 million the previous year, a decline of Rs.22.8 million and a percentage decrease of 30%. The decrease in gross profit is attributed to 'disruptions caused in the production due to the construction work carried out in the factory and stoppage of the antenna assembly operation.' The company says that once the Factory Development programme is complete, it will be able to improve productivity and increase its profits.
During 2006, Singer earned Rs.9.5 million as interest from the surplus funds invested. In addition, the company earned a lease income of Rs.2.4 million in 2005 from the lease of its land of over 50 perches and the building to an associate company. The profit before tax for 2006 was Rs.26.6 million, down from Rs.50.4 million in the previous year resulting in a decrease in profitability of Rs.23.8 million. Singer's associate company, First Capital Ltd reported a loss in the current year. The share of loss of the associate company before tax up to the date of disposal was Rs.24.7 million compared to a loss of Rs.1.5 million in 2005. Similarly, Singer did not receive any dividend from First Capital Ltd compared to Rs.10.6 million received in the previous year.
The net profit after tax for 2006 was Rs.22.9 million compared with Rs.35.9 million in 2005. The total assets increased to Rs.445 million from Rs.396 million, an increase of Rs.49 million over 2005 despite the disposal of the investment in First Capital Ltd. Total equity increased to Rs.327 million in 2006, up from Rs.313 million during the corresponding period the previous year. Singer attributes this increase 'to the significant profits generated by the company.'
According to the Annual Report, sewing machines make up 95% of the company's net turnover, followed by televisions and antennas at 2% each and security systems at 1%. During 2006, Singer has also made strides in adopting environmentally friendly methods in its manufacturing process.
"The introduction of an ultraviolet curing painting system was chief among these and has led to improvements in worker safety during the painting process." Similarly, a dust extraction system was introduced to prevent the accumulation of dust inside the factory premises which also reduces pollution and decreases electricity consumption.