Higher-margin business boosts D&L profit

Food and plastic input manufacturer D&L Industries grew its net profit in the first nine months by 13 percent year-on-year to P2.4 billion as higher-margin businesses were boosted by intensified research and development (R&D) initiatives.

This gives the company confidence that it will meet its full-year profit goal of at least P3.2 billion, up 10 percent from year-ago level, D&L president Alvin Lao said.

For the third quarter alone, net profit rose by 13 percent year-on-year to P874 million.

The volume of high-margin specialty products grew by 8 percent year-on-year and 4 percent quarter-on-quarter, contributing 63 percent to revenue from 58 percent share in full-year 2017.

The growth in the high-margin business is seen as a reflection of D&L’s investments in R&D which allow it to increase market penetration and to develop more complex and customized products for customers.

The balance of 37 percent of revenue was accounted for by the commodity business that saw its margins recover this year. Blended commodity margin rose to 8.4 percent in the period from 4.1 percent in full year-2017. Overall gross profit margin rose 1.4 points year-on-year to 18.2 percent.

Exports as percentage of total revenue stood at 23 percent in the first nine months, up from 21 percent in the first half. In the third quarter alone, export contribution to total sales was 25 percent. In peso terms, export revenue fell 8 percent due to lower commodity prices. —DORIS DUMLAO-ABADILLA