Consumer durables, particularly the consumer electronics and IT products are set for favourable growth in 2017 despite the triple threat from higher interest rates, higher taxation and a depreciating rupee, consumer durables giant Singer (Sri Lanka) PLC said
“I am optimistic that this will not significantly curtail demand for consumer durables,” Singer Chairman Dr. Saman Kelegama said in the Singer annual report released this week, after noting that prices will witness increases due to higher taxation and rupee depreciation.
He said that despite 95 percent of electrification of households in Sri Lanka, penetration of consumer durables is still low, which, coupled with increased purchasing power, would allow more Sri Lankans to purchase electronic durables.
Singer Group CEO Asoka Pieris said that refrigerator penetration into households is estimated to be 60 percent, 25 percent for washers, 30 percent for computers, and 10 percent for air conditioners. “Experience in countries where per capita income has increased, dictate that demand for consumer durables would grow at a higher rate than per capita income growth. This is because the additional income acquired would be spent on enhancing the living standards than on basic items,” he said. Dr. Kelegama noted that personal electronic items would be a focus area in the coming year.
“There is a rapid development in electronics and IT/mobile phone sector, by way of improved features and lower costs resulting in new models and new technology introduced each year. This encourages consumers to replace such items faster,” he said.
Pieris added that in 2016 tablet/media pad sales increased by 105 percent Year-on-Year (YoY) while smartphone sales increased 54 percent YoY.
Total sales on both product categories increased to 488,500 units in 2016, up from 312,900 YoY, though higher bases have started to contribute towards lower growth figures.
Despite volume growth, Singer’s consumer electronics revenue for 2016 increased just 6 percent YoY to Rs. 6.67 billion. IT product turnover increased 40.10 percent YoY to Rs. 10.39 billion. Meanwhile, Pieris said that changing generational patterns, where younger generations prefer to buy new furniture compared to hand-me-downs preferred by older generations, and the movement from houses into apartments also creates opportunity for furniture sales growth.
Furniture revenue for last year increased 20 percent YoY to Rs. 2.36 billion. (CW)