Fitch affirms Singer (Sri Lanka) at ‘A(lka)’

Fitch Ratings Lanka has affirmed the National Long-Term rating on Singer (Sri Lanka) PLC’s (Singer) senior unsecured notes at ‘A(lka)’ . The outlook is stable.

The rating reflects Singer’s market position as one of Sri Lanka’s largest consumer durables retailers, its established franchise and extensive distribution network, a multi-brand product portfolio that is diversified across price points, and well-managed financing operations.

The rating also reflects Singer’s improved credit profile over 2010 and the nine-months to end-September 2011 (9M11) as expected.

This was supported by the economic upswing that prevailed locally during the same period, combined with tax incentives granted to the consumer durables industry that reduced the impact from the grey-market. In 9M11, Singer’s revenue increased by an annualized 29% to Rs 15.4 bn (2010: 34.5%, 2009: -13%).

Much of this growth was driven by same-store sales, as the industry benefited from lower duties on imported consumer goods and benign interest rates and inflation.

Its EBITDAR margin remained healthy at 15.4% in 9M11 (2010: 15.6%, 2009: 15.4%).

Singer’s liquidity position remained comfortable. As at end-September 2011, it had cash and cash equivalents of Rs 374 million and undrawn facilities of Rs 2.5 billion, against medium-term debt maturities of Rs 440 million due within one year and Rs 698 million due within one-two years.