D&L hikes profit target

MANILA, Philippines - D&L Industries Inc., a manufacturer of customized food ingredients and specialty products, has upgraded its earnings guidance for the year on the back of a record performance in the first half.

The company is banking on the growing demand for both commodities and high-margin specialty products here and abroad to sustain the growth momentum in the coming years, a company executive said.

“We are now expecting net income growth for the year at high teens to low 20s, at 18-21 percent,” D&L Industries executive vice president and chief finance officer Alvin Lao said in a briefing.

In February, D&L Industries announced that it expects profits to improve 15-19 percent this year from the recurring net income of P1.4 billion in 2013.

In a disclosure, the company said its profits jumped 22 percent to P799 million in the first six months from P655 million while revenues picked up 26 percent to P6.22 billion from P4.93 billion a year ago.

“We continue to see volume growth across all our companies,” Lao said.

“The past four consecutive quarters have seen average sequential topline growth of four percent, driven by higher volume sales and rising commodity prices, in particular coconut oil,” D&L Industries said.

It added that gains in both volume and margin were particularly strong in specialty plastics, complemented by stable volume growth in food ingredients’ customized specialties.

In the first half, high-margin specialty products accounted for 63 percent of overall sales while low margin commodities accounted for 37 percent.

D&L Industries is principally into the manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use. To date, the company, which was established in 1963, has more than 500 food ingredient formulations.

Specifically, the food Ingredients business recorded a 30 percent and 16 percent growth in revenues and net income, respectively, given the presence of specialty fats and oils in almost every food product and gains in the commodities business.

Oleo-fats’ two new production facilities were complemented by a well-established logistics that include own access to barges, storage tanks and road tankers. It allowed D&L Industries to perform better despite logistical challenges like the Manila truck ban and port congestion.

For the plastics business, sales increased 17 percent on the back of double-digit volume growth. D&L Industries said that in general, specialty plastics benefited from strengthening global car sales and evolving demands in car designs, resurging Philippine manufacturing, as well as niche applications such as biopolymers.

Chemrez Technologies said biodiesel volume has been stable and margins steady, with substantial growth in revenues tracking the year-on-year increase in coconut oil prices.

Lastly, the aerosols units’ volume grew in the first half, driven by the personal care. Overall, sales and net income were higher year-on-year by two percent and four percent, respectively.