Inflation bites Singer in Q3

To cope with soaring inflation, consumers have tightened their purse strings – they are now spending mainly on essential goods rather than home appliances. That is why Singer Bangladesh Limited could not meet the expected sales target, which caused it to incur a loss of Tk8.50 crore in the July-September quarter of 2022.

The multinational electronics and home appliances company cited in its quarterly unaudited financial statement that Russia's invasion of Ukraine has depressed the prospects of a post-pandemic recovery. Economic activities remained depressed as freight, energy and food price shocks continued to impact adversely. These have been further fuelled by the significant deprecation of the taka against the US dollar.

But the significant cost hike could not be adjusted with the selling prices. The competition was not supporting the full-scale price increase, as competitors were not re-acting in line with expectations, the report also said. 

As a result, the company lost more than 5% gross margin, which led to a loss in the third quarter.

In July-September, Singer's revenue grew 13% to Tk517.67 crore, but its cost of sales and the finance cost significantly increased by 21% and 46% year-on-year. As a result, it suffered a loss.

Meanwhile, the company has been under pressure since the beginning of this year owing to the increase in business expenses. Hence, in the first nine months of this year, its net profit fell by 76% to Tk14.57 crore despite a 9% rise in sales, according to the company's financial statement.

Again, the company's sales have increased in instalments because high inflation eroded people's purchasing power. Therefore, the company's dues with customers rose by 55%. 

The company is also suffering from a net operating cash crisis due to increased costs of importing raw materials, causing its short-term bank loans to increase by 80% to Tk834 crore compared to the previous year.

And, its net asset value per share fell by 13% to Tk29.53.

For the same reason, Walton's profit also fell by 26% in FY22. Besides, the company is also suffering from a net operating cash crisis due to rising costs.

Singer was listed on the Dhaka bourse in 1983. Following the founding Dutch family's divestment, 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 Tk151.90 on the Dhaka Stock Exchange.

Meanwhile, Singer has started the construction of its state-of-the-art manufacturing plant by investing Tk800 crore at the Bangladesh Special Economic Zone at Araihazar, Narayanganj. 

Arçelik's Chief Commercial Officer Cemal Can Dinçer said Singer aims to locally manufacture 90% of its products, up from the present rate of 52%. The company would also help develop local suppliers for the electronics and home appliances industry.