D&L’s 2014 profit breaks P2B level

SCREENGRAB from www.dnl.com.ph

LAO family-led food and plastic input manufacturer D&L Industries ended 2014 as a banner year, with net profit breaching P2 billion and revenues exceeding P20 billion for the first time with the consolidation of Chemrez Technologies into its books.

D&L’s net profit grew by 27 percent to P2.033 billion on the back of a 39-percent rise in full-year revenues to P20.52 billion, the company reported to the Philippine Stock Exchange on Thursday. This performance translated to a return on equity of 26.6 percent for the year versus 25.7 percent in the previous year.

The figures were presented on a pro-forma basis, assuming 100 percent of ownership of Chemrez for both 2014 and 2013. Last year, D&L acquired the remaining 65 percent of Chemrez, a deal that boosted the former’s revenues by 27 percent and net income by 16 percent.

In a press briefing, D&L chief finance officer Alvin Lao said the company was expecting another record year for net profit this year, although revenues would likely ease due to the downturn in commodity prices.

Lao said the P2.4 billion average net profit forecast of analysts covering D&L for 2015 was “achievable.”

The 39-percent growth in full year revenues was driven by double-digit volume growth in food ingredients and oleochemicals and other specialty chemicals businesses.

High margin specialties, which accounted for 59 percent of sales, increased by 22 percent year-on-year, led by oleochemical specialties and customized specialty food ingredients. The commodities segment accounted for 41 percent.
 Commodities outgrew high margin specialties resulting in a net income margin of 9.9 percent versus 10.8 percent. Lao said the commodity business did very well in 2014 because of the Bureau of Customs’ crackdown against commodity smugglers.

“What we believe will happen this year, although we’ve seen commodity prices decline, is that our margins will not be affected as much,” Lao said.

Around 18 percent of the company’s total sales came from exports amounting to P3.68 billion in 2014 or up by about a third. Lao said the direction is to grow this export segment further. Over the long term, D&L’s big hairy audacious goal (BHAG) is to derive half of total business from exports.

At present, half of its exports consisted of specialty plastics. Food ingredients are the fastest growing exports.