Food and plastic input manufacturer D&L Industries sees its net profit sustaining a growth of 15-19 percent in 2017, tracking the trajectory this year alongside a fast-growing economy.
In a press briefing, D&L president Alvin Lao also reported that business was upbeat this fourth quarter, reflective of the resilience of the economy.
While estimating that growth next year could sustain this year’s trajectory, Lao said official targets would be finalized once the company reports its full-year 2016 results.
Lao said the second quarter of this year was expectedly robust because of the election spending while the third quarter was “back to normal.”
“In the fourth quarter, the economy really had underlying strength. People were planning to hold back because the elections were over and (activity) bump was over. But I think they realized the underlying economy is in much, much better shape now,” Lao said.
A growth in bottomline of 15-19 percent was still a “quite respectable” target for next year, he said. “Also, we tend to underpromise and overdeliver. That’s why we don’t want to be too over-optimistic.”
If the US Federal Reserve raises interest rates as expected this December, for instance, Lao said this might trigger more uncertainty. As such, he said D&L was just looking at maintaining the current growth pace.
Capital spending by D&L next year is seen to rise by 15-20 percent from the P300-million allotment for this year.
D&L’s factories have a utilization rate of about 60 percent, giving it room to ramp up production whenever needed.
Earlier this year, D&L set its profit growth guidance at only 10 percent but following a stronger-than-expected performance in the first semester, the guidance was revised to mid- to high-teen levels.
In the first nine months, D&L grew its net profit by 19 percent year-on-year to P1.93 billion as revenues were boosted by higher commodity prices and sales volume. Excluding one-off items arising from tax and filing costs related to the increase in authorized capitalization in June 2015, recurring net profit was up by 16 percent in the first nine months to P1.93 billion.
The nine-month performance translated to a return on equity of 19.4 percent and a return on invested capital of 20 percent.
D&L’s year-to-date revenues were up by 10 percent on the back of a broad-based increase in sales volume and higher prices of palm oil and coconut oil in the third quarter.