D&L maintains strong credit rating

The Lao family’s food ingredients and plastics manufacturing giant D&L Industries Inc. kept its strong credit rating and stable outlook for the next 12 months.

Philippine Rating Services Corp. (PhilRatings) maintained D&L’s credit rating of PRS Aaa, which indicates a very low chance of default. The PRS Aaa is the highest rating that could be assigned by the firm.

Moreover, a stable outlook means the credit score would likely be maintained over the next year.

In coming up with the credit score, PhilRatings said it considered the company’s diversified product offerings and strong market position, sustained profitability, conservative debt management and adequate cash flow generation.

It also underscored D&L’s expansion via the company’s new manufacturing facility in Batangas, which is now 95-percent complete.

“D&L has been operating for more than five decades, and it is a pioneer in several of the businesses it operates in,” PhilRatings said.

“The company has organically grown with the domestic industries it serves, with its businesses reportedly being either the country’s top market player or a close second in each of its respective industries,” it added.

From January to June this year, D&L saw profits rise 17 percent to P1.6 billion as sales jumped 61 percent to P22.32 billion.

Company president and CEO Alvin Lao earlier said the strong first half results would allow D&L to potentially beat the profit record of P3.2 billion that was achieved in 2018.

PhilRatings also pointed to D&L’s diversified business, which helped it weather the health crisis and positioned the firm for growth during the postpandemic period.

“The wide diversification in product offerings and customer base results in the balancing out of developments across the business segments,” PhilRatings said.

“The benefit of such was highlighted in the shift of consumer preference amid the COVID-19 pandemic, where the lower sales volumes recorded for specialized and discretionary products were counterbalanced by the stronger demand for basic commodities,” it added.

D&L issued P5 billion in bonds in September last year to partly finance the construction of its Batangas facility.

Total debt stood at P13.7 billion at the end of June this year, which was lower by 1 percent compared to the previous year due to net repayments of borrowings. Moreover, the company’s debt-to-equity ratio was maintained at 0.7 times as of end of June 2022 while total debt to capitalization ratio was relatively unchanged at 42 percent.

“Positive cash from operations funded working capital needs while internally generated cash was used for the construction of the Batangas expansion. D&L sees capital expenditure slowing down after the completion of the facility,” PhilRatings said. INQ