August 8, 2017 – D&L Industries’ recurring net income reached Php1.35 billion, or earnings per
share of P0.19, in the first six months of 2017. This is 7.5% higher than last year. Earnings before
interest and taxes were higher by 10% at P1.73 billion. Meanwhile, total revenues reached P12.7
billion, up 24% y-o-y, which was mainly driven by higher commodity prices.
Given an exceptionally strong second quarter last year due to election-related spending, the
company reported a marginal growth in earnings this quarter. Net income in 2Q17 increased by
1% to P688 million from P680 million in the same period last year. Over the most recent two-year
period however, 2nd quarter earnings grew at an average of 11% y-o-y.
Export sales maintained its growth momentum as it grew 64% y-o-y in the first six months of the
year. Exports accounted for 23% of total revenues compared with just 18% in full year 2016. With
the company’s partnerships with Ventura and Bunge maintaining pace, the food ingredients
segment is now the biggest contributor to exports. The segment contributed 42% to total export
sales compared with just 19% in full year 2016.
Meanwhile, gross margins for the high margin specialty products (HMSP) continue to improve,
growing by 0.7 ppt y-o-y to 25.3% in the first six months of the year. While blended commodity
margins are still lower compared to their historical average, they inched up by 1.5 ppts in the
second quarter to 4.5% from 3% in the first quarter. HMSP accounted for 59% of revenues while
the remaining 41% was accounted for by commodities in the first half of the year.
Overall, net income margin compressed by 1.6 ppts to 10.6%. Annualized return on equity and
return on invested capital for the first six months of the year stood at 17.6% and 20%, respectively.
The company’s balance sheet remained robust with net gearing at a modest 13% and comfortable
interest cover at 23x. As of end-June 2017, net debt stood at P2.0 billion with average cost of
debt at 3.5% (inclusive of DST). The company generated positive free cash flow of P131 million
for the period.
“We remain optimistic on all our business segments,” said President and CEO Alvin Lao, “Moving
forward, our growth will continue to be supported by the vibrant domestic economy and still robust
consumer spending. Moreover, our export business offers exciting growth opportunities for us.
We remain committed to our R&D investments that support the growing needs of our customers.”
The food ingredients segment grew its earnings by 7% in the first six months of the year. Total
volume increased by 5%, driven primarily by the 14% increase in commodity volume as HMSP
volume fell by 5%. This can be explained by the exceptionally strong growth in the HMSP volume
last year which grew 24% in the first six months of 2016 given the boost from election-related
spending. Over the most recent two-year period however, HMSP volume grew by an average of
9% in the first six months of the year. Volume growth should normalize starting the second half of
Meanwhile, the 1 ppt improvement in HMSP margins somehow offset the decline in commodity
margins. Overall, food ingredients segment margins fell by 2.1 ppts to 13.4%.
Oleochemicals and Other Specialty Chemicals
The oleochemicals segment increased its earnings by 14% in the first six months of the year
despite weakness in the biodiesel business. Biodiesel (low margin commodity), which contributed
46% to group revenues and 23% to group gross profits, saw its volume decline by 33%. As a
result, total volume for the group fell by 16%.
The recovery of Other Specialty Chemicals and margin expansion of export-oriented specialty
oleochemicals offset the weakness in biodiesel. Other Specialty Chemicals saw its volume and
revenues increase by 15% and 26%, respectively, in the first half of the year after several years
of earnings decline. Meanwhile, specialty oleochemicals saw its margins improve by 10 ppts.
Specialty plastics group posted flat earnings y-o-y in the first half of the year as it takes a breather
from a faster-than-expected recovery from the port congestion in 2014. Revenues grew 4% y-o-
y to P1.39 billion mainly on higher average selling price. Total volume fell by 3% as the strong
growth in the Colorants and Additives segment was offset by the lower volume in the Engineered
Polymers segment. Meanwhile, overall margins compressed by 1.5 ppts to 29%.
Aerosols group remains the fastest growing business of the company as it posted a 36% y-o-y
earnings growth in the first half of the year. This was mainly driven by the 2.7 ppts margin
expansion and 18% volume growth. Aerosols group now contributes 7% to D&L’s consolidated
income compared with just 3% contribution five years ago.
The Company expects the segment’s strong growth momentum to continue as aerosol
penetration in the Philippines remains low. Moreover, the segment should benefit from the
increasing consumer demand across all categories, due to rising levels of disposable income in
At the board meeting last August 7, Mr. Joselito P. Rivera was appointed as D&L Industries’ Chief
Operating Officer. This appointment is part of D&L’s efforts to professionalize its management
team as the company continues to take on growth opportunities locally and internationally.
Mr. Rivera’s corporate leadership experience was gained through multi-disciplinary roles at local
and multinational companies. He was the Global Head for Leadership at Ericsson Corporate
Headquarters in Stockholm, Sweden for six years. Prior to that, he was with Ericsson Philippines
for nine years where he held various management positions such as Senior Vice President for
Business Development and Head for Market Communications, Vice President for Human
Resources and Operations Development, Asia Pacific Head for Ericsson University and Talent
Management. He also held positions in human resources and organization effectiveness roles at
Basic/Foote, Cone & Belding, and Philippine Airlines.
He is currently the Chairperson, Board of Trustees and OIC President of Pamantasan Lungsod
ng Marikina and Lead Adviser for Marikina Local Government, Office of the Mayor, with focus
areas in education, DRRM, livelihood and health. He was formerly Lead Adviser for several
organizations such as the McCann World Group, Philippine Business for Social Progress, Staff
House International, SEA Institute, Ateneo Law School, Puno Law and various Government
Mr. Rivera is also involved in several non-profit organizations. He is currently the President and
member of the Board of Directors for Tulong-Dunong Foundation, and member of the Board of
Directors of Philippine Toy Library and CRIBS.
Sharing his experience, Mr. Rivera taught at the Ateneo Graduate School of Business, and has
been a resource speaker abroad and in the country for various professional conferences and
universities. He holds an AB Psychology degree from the Ateneo de Manila University and
previously served as President of the Ateneo Alumni Association.
D&L Industries is a Filipino company engaged in product customization and specialization for the
food, plastics, and aerosol industries. The company’s principal business activities include
manufacturing of customized food ingredients, specialty raw materials for plastics, and
oleochemicals for personal and home care use. Established in 1963, D&L has the largest market
share in each of the industries it serves, as well as longstanding customer relationships with the
Philippines’ leading consumer and chemical companies. It was listed on the Philippine Stock
Exchange in December 2012. For more information, please visit www.dnl.com.ph.
INVESTOR RELATIONS CONTACT
Investor Relations Officer - D&L Industries Inc.
+632 635 0680
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