Singer incurs loss as production cost up, consumers trim spending

Singer Bangladesh Limited is facing financial backlash as the company reported a net loss in the third quarter of 2022, thanks to the consumers who are now spending less on buying home appliances amid the ongoing macroeconomic hardships.

The soaring import costs of raw materials also added fuel to the crisis.

The country’s leading home appliance maker logged a net loss of Tk 8.5 crore in July-September this year against a net profit of 1.27 crore in the same period of last year.

The company had a net profit of Tk 42.63 crore in the third quarter of 2020.

Due to the shocking fall in net profit, its earnings per share (EPS) also entered into negative territory for the first time in three years. The home appliance maker’s earnings per share (EPS) stood at negative Tk 0.85 for July-September of 2022 versus Tk 1.28 for July-September of 2021.

It had an EPS of Tk 4.28 in the third quarter of 2020.

The company’s net asset value (NAV) per share also dropped to Tk 29.53 in the third quarter of this year from Tk 34.06 in the same period of the last year.

Although the company registered a negative growth in July-September this year, it spent 23 per cent year-on-year more on advertising and promotions meantime to boost its sales.

When contacted, Kazi Ashiqur Rahman, company secretary of Singer Bangladesh Limited, could not provide any further details on its ongoing financial states. The company says the Russia-Ukraine war shattered their hopes of a post-pandemic recovery, leading to registering negative growth in July-September this year. Due to the war, the economic activities both on the global and the domestic fronts remained subdued in recent months due to the hike in freight and energy costs, according to the DSE disclosure.

Besides, the deprecation of the Taka against the US dollar also led to the increase in import costs of raw materials.

Furthermore, the soaring inflations in recent times forced consumers to curtail their expenditures on buying non-essential goods except for food items, a reason that also hammered the home appliance manufacturer’s earnings in Q3 this year.

In Q3 of 2022, the company lost more than 5 per cent of gross margin compared to the same quarter of 2021 due to the significant cost increase which could not be adjusted with the selling price.

The import costs of raw materials soared meantime that resulted in a 20.5 per cent rise in the cost of sales in July-September this year. The company’s share price remained unchanged at Tk 151.9 per share on the trading floor of the DSE on Sunday.

Earlier, the company signed a land-lease agreement with the Bangladesh Special Economic Zone at Araihazar in Narayanganj for the lease of 35 acres of land to establish its new manufacturing complex. Two months earlier, it also announced an investment of Tk 680 crore to boost its manufacturing capacity.