D&L planning to tap bond market

Specialty plastic and food input manufacturer D&L Industries aims to debut at the local bond market by September this year and raise as much as P5 billion to fund its capacity expansion program in Batangas.

Because of renewed lockdown restrictions, the completion of the P8-billion Batangas production site could be pushed back, D&L president Alvin Lao said during the company’s stockholders meeting on Monday. It was originally targeted to be completed by the end of this year.

The plant is seen by the firm as key to growing its export earnings to about 50 percent of total business in the coming years. The new facility would allow D&L to develop more high value-added coconut-based products and penetrate new international markets. It would mainly cater to D&L’s growing export business in the food and oleochemicals segment.

Construction of the new facility started in late 2018. About P4 billion in remaining capital outlays for the Batangas project is targeted to be disbursed this year.

“We are also seeing delays from tightness in supply chain and shipment around the world,” Lao told a press briefing after the stockholders meeting. “We are still assessing the full impact and will have more info in the next few weeks.”

Despite such delays, Lao said D&L’s existing facilities should be able to cover current market demand. With current utilization rate averaging at mid-70 percent, he noted there was still headroom to meet any increase in demand.

Last March, D&L obtained approval from its board of directors to issue at least P3 billion up to P5 billion of bonds with a tenure of three to five years. Lao said D&L was now working on the requirements to be able to submit the registration statement to the Securities and Exchange Commission.

“I believe we’re targeting to issue in the first or second week of September,” Lao said.

Lao also reiterated D&L could return to prepandemic profit levels this year. If the first quarter results were annualized, D&L could generate P2.8 billion in net profit for the full year, beating last year’s P2 billion and even the P2.6 billion level seen in 2019.

D&L also declared on Monday a regular cash dividend of P0.141 per share plus a special cash dividend of P0.05 per share to shareholders of record as of June 21. Ex-date is on June 16, and payment will be made on July 15.

The company reaffirmed its commitment to its dividend policy of a 50-percent payout ratio based on the prior year’s net income. In addition, the company has resumed payment of a special dividend after it was paused last year due to the pandemic.