D&L Industries posts 16% profit hike

MANILA, Philippines - D&L Industries Inc., a leading manufacturer of customized food ingredients, posted a strong double-digit profit growth in the first half, driven by increased turnover for high margin specialty products.

The firm’s net income jumped 16 percent to P655 million in the first semester, keeping D&L on track to hitting a record net income of nearly P1.4 billion for the entire year, a top company executive said.

But revenues dropped 17 percent to P4.9 billion due to lower prices of commodities like palm oil that was passed on to customers.

However, D&L said it benefited from high margin specialty products like customized specialty food ingredients, plastics and aerosols.

High margin products accounted for 66 percent of the group’s overall sales, while low margin commodities like refined vegetable oils accounted for 34 percent of total turnover.

“We are progressing further towards expanding our high-margin specialty businesses,” D&L said. The company expects to trim low margin products’ contribution to around 20 percent in the next five years.

“We are capable of doing a lot more products. One reason why our margins increase is because of we are developing more ingredients for food, plastics and aerosols,” Alvin Lao, executive vice president and chief finance officer of D&L, said in a briefing.

Hence, D&L said its gross profit margin picked up to 18.7 percent from 15 percent last year while net income margin hit 13.3 percent from 9.5 percent a year ago.

“Overall, the company remains in line with expectations this year,” Lao said, adding that net income will likely climb nearly a third to P1.38 billion for the entire year compared with 2012.

In terms of its business units, the food ingredients segment posted P263 million net income, up 23 percent from last year despite a 17-percent decline in revenues to P3.5 billion due to weak palm oil prices.