D&L Industries Inc., a maker of specialized food ingredients and plastics, said net income in the nine months through September rose 25 percent to P1.04 billion as margins improved.
The company said in a regulatory filing that all business segments—food ingredients, plastics, oleochemicals, and aerosol—reported year-on-year growth, even as total revenues dipped 9 percent, because of lower commodity prices. For the third quarter lone, net income increased 43 percent to P387 million.
D&L is owned by the same family behind listed Chemrez Technologies Inc., where the company has a 34 percent stake.
D&L said high margin specialty products accounted for 69 percent of the group’s overall sales for the period and low margin commodities accounted for 31 percent.
This resulted to overall gross profit margin rising to 18.6 percent from 15.7 percent last year, and overall net income margin improving to 13.6 percent from 9.9 percent.
“Year-to-date, we continue to make substantial, measurable progress on our strategic priority—focusing more on higher margin specialty products— bringing us further on track to meet expectations this year,” the company said.
Food ingredients, through its Oleo-Fats Inc. unit, continues to be the biggest contributor and the unit continued to grow due to “strong tailwinds in domestic food consumption trends.”
“Improving market dynamics also supported recovery in volume of refined vegetable oils. More importantly, volume growth was sustained in specialty fats and oils—a category deemed significant to our strategy,” D&L said.
Oleo-Fats ended the first nine months with a net income of P420 million, up 22 percent, while revenues dropped 12 percent to P5.5 billion as a result of lower prices of palm oil.
The plastics business, meanwhile, has normalized in terms of growth as D&L noted that earnings improved 26 percent to P402 million. Margins increased in all product categories, which we continue to attribute to improving specialty product mix.
“As to the deal announced early this year with Showa Denko for the manufacturing of bioplastics compound, trials are now being run in Italy. It will be the next market destination after Japan, where shipments for agriculture applications of biopolymers already started,” D&L said. Miguel R. Camus