MANILA, Philippines—Food and plastic input manufacturer D&L Industries breached the P1-billion net profit milestone in 2012 as the company boosted its margins by selling higher value added specialty products and reducing commodity-based businesses.
Including one-time gains from the sale of land, consolidated net income hit P1.33 billion last year, 34 percent higher year-on-year. Core net profit went up by 4 percent to P1.03 billion, the company disclosed to the Philippine Stock Exchange.
This year, D&L aims to chalk up a core net profit of P1.38 billion on the back of a mid-teens growth in sales volume and revenue.
“There is room for increases in margins. We’re going to increase margins by 1 percentage per year and the way to do that is not just to reduce sales of lower-margin (commodity products) but sell more high-margin products,” Lao said in a press briefing on Thursday.
Last year, customized food ingredients and other specialty products increased the group’s margins higher. Gross profit margin was up by 2.6 percentage points to 15.9 percent while net income margin went up by 1.8 percentage points to 9.5 percent.
This developed as D&L shifted its sales mix such that two-thirds of the business was now coming from higher-margin specialty products and only a third was reliant on commodities like refined vegetable oil. In 2011, the low-margin refined vegetable oils business accounted for 60 percent of sales, putting pressure on profitability.
Through wholly-owned subsidiary Oleo-Fats, D&L manufactures a diverse line of specialty fats and oils, culinary and other specialty food ingredients as well as industrial fats and oils for leading food manufacturers and fast food restaurant chains in the country.
D&L also owns First in Colours and D&L Polymers & Colours, which produce a line of various products used in the manufacturing of plastic products including pigment blends, color and additive masterbatches and engineered polymers for local and offshore markets.
Another wholly owned subsidiary, Aero-Pack Industries, is the only manufacturer of customized aerosol products in the country and is a leading contract filler for various home and personal care product producers.
Publicly listed affiliate Chemrez Technologies is engaged in the manufacture and sale of specialty industrial chemicals such as biodiesel, oleochemincals, powder coatings and resins, which have various applications in the construction, shipping, soap and detergent and furniture industries.