Food and plastic input manufacturer D&L Industries expects to sustain a minimum of 10 percent growth in net profit this year, coming from a similar pace of growth last year.
D&L reported a net profit of P3.2 billion last year, up 10 percent from a year ago, reaping the benefits of a business mix that was skewed toward high-margin products. Full-year sales revenue went down by 4 percent to P26.54 billion due to the lower selling price of coconut oil, a significant component of its commodity business, but overall high margins still enabled the company to post a better bottom line.
For the fourth quarter, net profit was flat year-on-year at P785 million as the high-inflation environment for most of the year gnawed on consumer sentiment and turned D&L’s institutional clients cautious on expansion activities.
This year, D&L president Alvin Lao said the company was targeting a double-digit growth in net profit. The midterm election is seen contributing to higher economic activity this year.
It’s possible that revenue may rebound this year as coconut oil prices bottom out, Lao said.
Last year, profitability was supported by an improvement in gross profit margin to 19.1 percent from 16.8 percent in 2017. Net profit margin likewise improved to 12 percent from 10.5 percent.
Margin expansion was attributed to the company’s increased focus on research and development (R&D) and its ability to effectively pass on price changes to customers.
The company aims to further grow both margins and market share, by continuing to develop specialized products in accordance with specific customer needs, Lao said.
D&L’s high-margin specialty products accounted for 63 percent of total business last year, while the commodity business—palm oil, fish oil, biodiesel and coconut oil—had a share of 37 percent. The share of high-margin products improved from only 58 percent in the previous year.
The specialty chemicals under Chemrez grew earnings by 30 percent last year, largely driven by the strong performance of oleochemicals.
The specialty plastics group expanded net income by 13 percent while the aerosols group posted a 12-percent profit growth for the year, with volumes growing 29 percent.—DORIS DUMLAO-ABADILLA