Earnings Report /
Bangladesh

Singer Bangladesh: Q3'22: Net loss driven by lower gross margin, higher financial expenses and tax

  • Gross margin fell substantially by 513 bps from c25% in Q3 CY21 to c20% in Q3 CY22.

  • Financial expenses registered a c46% yoy rise in Q3 CY22 and a c56% yoy rise in 9M CY22.

  • Effective tax rate stood at an enormous c62% in 9M CY22.

IDLC Securities
26 October 2022
Published byIDLC Securities
  • Singer posted net loss in Q3 CY22; 9M figures show 76% yoy decline in profit. Major drivers of profit decline include gross margin dent, rise in financial expenses and high effective tax rate.

  • Revenue: Q3 met annual expectations, but 9M figures underperformed. Revenue grew 12.8% yoy in Q3 CY22 while it only grew 9.3% yoy in 9M CY22. Moreover, revenue stood at BDT 5,167 mn and BDT 14,415 mn in Q3 CY22 and 9M CY22 respectively.

  • Gross margin fell substantially by 513 bps from c25% in Q3 CY21 to c20% in Q3 CY22. Before Covid-19, gross margin was in the 27-28% range. In Q3 CY22, it fell 513 bps yoy to 20%, underperforming expected margin of 21.5%. High level of global commodity prices and BDT depreciation against USD were major drivers.

  • Opex/sales declined by 179 bps yoy because of a c77% yoy decline in demurrage costs in Q3 CY22. In Q3 CY22, demurrage costs fell by c77% yoy to BDT 38.4 mn from BDT 163.7 mn whereas in 9M CY22 it fell c82% yoy to BDT 47.8 mn. This is because when the supply chain improved, excess demurrage charge on delayed shipments reduced.

  • Financial expenses registered a c46% yoy rise in Q3 CY22 and a c56% yoy rise in 9M CY22. This rise can be attributed to a c34% yoy increase in loan balance to BDT 9.5 bn in Sep 2022 from BDT 7.1 bn in Sep 2021.

  • Effective tax rate stood at an enormous c62% in 9M CY22. Major driver was the ‘other components of tax’. It stood at BDT 81.6 mn in Q3 CY22 and BDT 147.6 mn in 9M CY22. This resulted in the BDT 85 mn loss in Q3 CY22.