Singer Bangladesh Limited has failed to achieve any profit growth in the April-June quarter of 2022 as it could not adjust its selling prices in line with the rising cost of production due to immense competition in the local market.
The company's net profit after taxes in the second quarter dropped to Tk13.95 crore, which was 51% lower compared to the same period a year ago.
According to the listed multinational firm's latest financial statement finalised at a board meeting on Tuesday, its turnover in the second quarter of 2022 grew by 9.40% to Tk535 crore, compared to the same period a year ago. Its turnover in the second quarter was 37% higher than that in the previous quarter.
But the rising import cost of raw materials increased the company's cost of production by 15% which could not be fully adjusted with its selling prices and ended up reducing its gross profit by 4% and operating profit by 21%, compared to the same quarter a year ago, said the company in its financial statement.
A decline in factory level profits, year-on-year rise in operational expenses, decline in other incomes, and sharp increase in finance costs hit Singer's bottom line in the second quarter, said sources at the company.
Singer said in its financial statement that the Covid-19 pandemic, the Russia-Ukraine war, commodity price hike, devaluation of the taka against the US dollar, and the recent flood were some of the major causes of its deviation from the expected performance in the second quarter of this year.
No Singer official could be contacted over the phone for comments on its cost hike or revenue growth.
Analysts said since the second half of 2021, the entire industry has been facing a production cost hike as all sorts of raw materials have been getting pricier in the global market.
Singer Bangladesh expects to improve its performance in the coming quarters as the overall economy is expected to do better.
The company's net asset value per share had reduced by 10.81% to Tk30.34 at the end of June this year.
At the end of the first half of this year, its total revenue stood at Tk925 crore and profit was Tk23 crore.
On Tuesday, Singer shares closed at Tk157 each – 1.94% lower compared to the previous session – at the Dhaka Stock Exchange.
Singer, which initially sold sewing machines and later home appliances, has been present in the country for more than a century.
It lost the top position in the refrigerator market to local competitor Walton in the 2010s – a great decade of localisation of the home appliances industry.
The company under the management of its new biggest shareholder Arçelik – an Istanbul-based global player in white goods – is increasing its investments in new facilities and technologies.
In March this year, Singer announced an investment of Tk680 crore aiming to re-energise the brand in the burgeoning local market.
Currently, local factories bring half of Singer's annual business and it is aiming at more localisation alongside exploring export opportunities from Bangladesh, Singer Director Cemal Can Dinçer told The Business Standard back in March.