Screengrab from www.dnl.com.ph
MANILA, Philippines — Food ingredients and plastic manufacturer D&L Industries posted a 20-percent year-on-year growth in first-quarter net profit to P377 million as all business segments expanded alongside the growing economy.
With the recovery in commodity prices, coupled with the strong growth momentum in volume, year-to-date consolidated revenues increased by 34 percent year-on-year.
In a press briefing, D&L chief finance officer Alvin Lao said the revenues had grown so fast that it pulled margins down a little — to 18 percent of gross revenues in the first quarter from 19 percent in 2013 — alongside the rebound of the lower-margin commodity business. Overall net income margin was at 12.2 percent from 13.6 percent a year ago.
D&P said the markets for the food ingredients’ customized specialties remained particularly strong in terms of volume and margins. High-margin specialty products accounted for 64 percent of the group’s overall sales for the period and low-margin commodities accounted for 36 percent.
Increases in commodity prices during the period outpaced growth in volume, resulting in margin compression.
Nevertheless, the past four consecutive quarters had seen average sequential topline growth of 5 percent on the back of increasing volume, shifting product mix and increasing commodity prices.
“It was a strong start to the year overall, setting us on a good trajectory for the remainder of the year. This was marked by sustained double-digit volume gains and consistent margin improvements in key high margin specialty businesses, including Chemrez Technologies. These innovation-driven businesses, in the long term, will fundamentally drive the company’s growth,” the company said.
D&L has an estimated market share of 80 percent in its customized ingredients businesses.
On food ingredients, strong volume growth in 2013 carried into the first three months of 2014, which was attributed by the company to the sustained underlying strength of the domestic consumer food and beverage market, as customers expand production facilities, add store outlets and extend their product lines across multiple categories.
For plastics, last year’s decline in volume and sales of the plastics group has reversed, driven by increased demand from existing businesses as well as new products. Sales for the first three months were 18 percent higher year-on-year.
The group’s focus on added value product developments delivered margin gains to engineered polymers, which accounted for the largest business of the plastics group. These products mostly go into the car industry, in particular wire harness manufacturing. Earnings for the period rose by 16 percent year-on-year.
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