Q3 net still down but D&L sees rebound soon

The worst may be over for food and plastic input manufacturer D&L Industries, which aims to return to a double-digit net profit growth trajectory next year after a challenging period this year.

In the first nine months, D&L’s net profit fell by 15 percent year-on-year to P2 billion as revenue tumbled by 18 percent year-on-year to P16.55 billion.

In the third quarter alone, net profit fell by 29 percent year-on-year to P617 million while revenue dropped by 20 percent to P5.52 billion.

“The company has faced a challenging environment in 2019, brought on by a confluence of external factors,” D&L president Alvin Lao said. “However, we look forward to focusing our efforts, harnessing the recent gains in sales mix and high margin products as a foundation for long-term growth. Over our 56-year history, we have navigated through several economic cycles and have transformed ourselves with increased resilience along the way. We believe that we are at the bottom of the cycle in terms of net income decline, with 2019 marking the first year, since the IPO (initial public offering), in which D&L may post a decline in full-year net income.”

Except for the plastics business which was difficult to predict as it relied heavily on export, D&L posted improvement across its business lines.

In the third quarter, the volume of high-margin specialty products grew by 7 percent year-on-year, from a decline of 8 percent in the second quarter.
Moving into 2020, D&L’s optimism stems from continued easing of inflation, lower interest rates and reserve ratio requirement, ramp-up in government spending, reduced port congestion, expectations of lower crude oil prices, and expected passage of the law that will reduce corporate income taxes.—DORIS DUMLAO-ABADILLA