Food ingredients, specialty plastic and chemical manufacturer D&L Industries saw a strong rebound in business in the third quarter with the reopening of the domestic economy coming from a sluggish second quarter when Metro Manila and other key regions were first subjected to tough quarantine protocols.
“The recovery in the third quarter confirms that we’ve survived the worst of this pandemic. Our income for the third quarter doubled from the income recorded in the second quarter, and even managed to surpass our first quarter income, which was not fully impacted by the pandemic yet,” D&L president and chief executive Alvin Lao said on Monday.
D&L booked P573 million in third quarter net profit. While this still marked a 7-percent drop in net profit year-on-year, it was a big improvement from the 57 percent year-on-year slowdown in second quarter earnings.
This brought net income for the January-September period to P1.37 billion, down by 32 percent from the same level last year.
Third quarter revenues rose by 4 percent year-on-year to P5.74 billion. For the nine-month period, revenues still declined by 4 percent to P15.92 billion.
“As more and more of our customers resume operations, and as people learn to cope with the new normal, we gain more visibility and confidence as [we move] forward,” Lao said.
The biggest recovery was seen in the food segment, likewise the worst hit when the lockdowns started.
The food ingredients segment, which accounted for 25 percent of total income, saw a significant improvement with third quarter profits surging by 421 percent from a low base in the second quarter.
This was largely due to sequential recovery in both volume and margins as more food establishments were able to operate during the quarter and with the corresponding increase in capacity utilization for dine-in operations as quarantine protocols were relaxed.
But with fewer people dining in and restaurants still operating within a shorter period, Lao said this segment was still performing at below prepandemic levels.
As the general direction is to gradually reopen the economy and as people adapt to the new normal, D&L expects the food ingredients segment to continue making quarter-on-quarter gains.
“As our optimism in the prospects of the business builds up, it’s no secret, as you can see in our disclosures, that the family continues to buy shares of D&L. We see the current depressed valuation as a limited window of opportunity for shareholders who, like us, seek long-term value,” Lao added.—DORIS DUMLAO-ABADILLA INQ