D&L profits rise on stronger high margin sales » Manila Bulletin Business

Manila Bulletin Philippines

Breaking News from the Nation's leading newspaper

Tempo

Online Newspaper

Showbiz and Celebrity News

Sports News

World News
News Asia

D&L profits rise on stronger high margin sales

Published

By James A.Loyola

D&L Industries Inc., the country’s largest specialty foods ingredients, plastics and oleochemicals firm, reported a 13.3 percent growth in recurring income to P2.4 billion in the first nine months of 2018.

 

Alvin D. Lao

Alvin D. Lao

In a press briefing, D&L President Alvin D. Lao said that,, for the third quarter alone, earnings and volume growth continued to accelerate with net income increasing by 13.4 percent to P874 million.

Lao said High Margin Specialty Product (HMSP) volume grew 8 percent year-on-year and its revenue contribution was at 63 percent versus 58 percent in full year 2017.

“The growth in the high margin side of the business is a reflection of our investments in R&D which allow us to increase our market penetration and to develop more complex and customized products for our customers,” he explained.

The remaining 37 percent of revenues was accounted for by the commodity business that saw its margins recover this year. Blended commodity margins improved to 8.4 percent in the first nine months of the year from just 4.1 percent in full year 2017.

As a result, overall gross profit margin for the company improved by 1.4 percentage points y-o-y to 18.2 percent.

Exports as percentage of total revenues stood at 23 percent in the first nine months of 2018, a slight increase from the 21 percent contribution recorded in the first semester of the year.

The food ingredients segment regained its position as the biggest export revenue contributor at 36 percent to total export sales. This was followed by Oleochemicals which accounted for 33 percent of total export sales.

The food ingredients segment posted flat operating profits in the first nine months of the year as the 18 percent growth in HMSP volume was offset by the 10 percent decline in commodity sales.

“Nonetheless, the pick-up in HMSP volume is encouraging as it represents the side of the business that is recurring and sticky. HMSP now accounts for 58 percent of total revenues, a meaningful improvement from just 51 percent in full year 2017,” said Lao.

He also noted that the firm’s non-food businesses more than made up for weaker food profits, resulting in higher earnings for the company.

Chemrez delivered 28percent earnings growth in the first nine months of the year while the specialty plastics group grew its net income by 24 percent, specialty plastics by 24 percent, and aerosols by 6 percent.

Related Posts