D&L Industries Reports First Half 2017 Results; Appoints Chief Operating Officer

August 8, 2017 – D&L Industries’ recurring net income reached Php1.35 billion, or earnings per share of P0.19, in the first six months of 2017. This is 7.5% higher than last year. Earnings before interest and taxes were higher by 10% at P1.73 billion. Meanwhile, total revenues reached P12.7 billion, up 24% y-o-y, which was mainly driven by higher commodity prices.

Given an exceptionally strong second quarter last year due to election-related spending, the company reported a marginal growth in earnings this quarter. Net income in 2Q17 increased by 1% to P688 million from P680 million in the same period last year. Over the most recent two-year period however, 2nd quarter earnings grew at an average of 11% y-o-y.

Export sales maintained its growth momentum as it grew 64% y-o-y in the first six months of the year. Exports accounted for 23% of total revenues compared with just 18% in full year 2016. With the company’s partnerships with Ventura and Bunge maintaining pace, the food ingredients segment is now the biggest contributor to exports. The segment contributed 42% to total export sales compared with just 19% in full year 2016.

Meanwhile, gross margins for the high margin specialty products (HMSP) continue to improve, growing by 0.7 ppt y-o-y to 25.3% in the first six months of the year. While blended commodity margins are still lower compared to their historical average, they inched up by 1.5 ppts in the second quarter to 4.5% from 3% in the first quarter. HMSP accounted for 59% of revenues while the remaining 41% was accounted for by commodities in the first half of the year.

Overall, net income margin compressed by 1.6 ppts to 10.6%. Annualized return on equity and return on invested capital for the first six months of the year stood at 17.6% and 20%, respectively.

The company’s balance sheet remained robust with net gearing at a modest 13% and comfortable interest cover at 23x. As of end-June 2017, net debt stood at P2.0 billion with average cost of debt at 3.5% (inclusive of DST). The company generated positive free cash flow of P131 million for the period.

“We remain optimistic on all our business segments,” said President and CEO Alvin Lao, “Moving forward, our growth will continue to be supported by the vibrant domestic economy and still robust consumer spending. Moreover, our export business offers exciting growth opportunities for us. We remain committed to our R&D investments that support the growing needs of our customers.”

Food Ingredients

The food ingredients segment grew its earnings by 7% in the first six months of the year. Total volume increased by 5%, driven primarily by the 14% increase in commodity volume as HMSP volume fell by 5%. This can be explained by the exceptionally strong growth in the HMSP volume last year which grew 24% in the first six months of 2016 given the boost from election-related spending. Over the most recent two-year period however, HMSP volume grew by an average of 9% in the first six months of the year. Volume growth should normalize starting the second half of this year.

Meanwhile, the 1 ppt improvement in HMSP margins somehow offset the decline in commodity margins. Overall, food ingredients segment margins fell by 2.1 ppts to 13.4%.

Oleochemicals and Other Specialty Chemicals

The oleochemicals segment increased its earnings by 14% in the first six months of the year despite weakness in the biodiesel business. Biodiesel (low margin commodity), which contributed 46% to group revenues and 23% to group gross profits, saw its volume decline by 33%. As a result, total volume for the group fell by 16%.

The recovery of Other Specialty Chemicals and margin expansion of export-oriented specialty oleochemicals offset the weakness in biodiesel. Other Specialty Chemicals saw its volume and revenues increase by 15% and 26%, respectively, in the first half of the year after several years of earnings decline. Meanwhile, specialty oleochemicals saw its margins improve by 10 ppts.

Specialty Plastics

Specialty plastics group posted flat earnings y-o-y in the first half of the year as it takes a breather from a faster-than-expected recovery from the port congestion in 2014. Revenues grew 4% y-oy to P1.39 billion mainly on higher average selling price. Total volume fell by 3% as the strong growth in the Colorants and Additives segment was offset by the lower volume in the Engineered Polymers segment. Meanwhile, overall margins compressed by 1.5 ppts to 29%.


Aerosols group remains the fastest growing business of the company as it posted a 36% y-o-y earnings growth in the first half of the year. This was mainly driven by the 2.7 ppts margin expansion and 18% volume growth. Aerosols group now contributes 7% to D&L’s consolidated income compared with just 3% contribution five years ago.

The Company expects the segment’s strong growth momentum to continue as aerosol penetration in the Philippines remains low. Moreover, the segment should benefit from the increasing consumer demand across all categories, due to rising levels of disposable income in the country.

COO Appointment

At the board meeting last August 7, Mr. Joselito P. Rivera was appointed as D&L Industries’ Chief Operating Officer. This appointment is part of D&L’s efforts to professionalize its management team as the company continues to take on growth opportunities locally and internationally.

Mr. Rivera’s corporate leadership experience was gained through multi-disciplinary roles at local and multinational companies. He was the Global Head for Leadership at Ericsson Corporate Headquarters in Stockholm, Sweden for six years. Prior to that, he was with Ericsson Philippines for nine years where he held various management positions such as Senior Vice President for Business Development and Head for Market Communications, Vice President for Human Resources and Operations Development, Asia Pacific Head for Ericsson University and Talent Management. He also held positions in human resources and organization effectiveness roles at Basic/Foote, Cone & Belding, and Philippine Airlines.

He is currently the Chairperson, Board of Trustees and OIC President of Pamantasan Lungsod ng Marikina and Lead Adviser for Marikina Local Government, Office of the Mayor, with focus areas in education, DRRM, livelihood and health. He was formerly Lead Adviser for several organizations such as the McCann World Group, Philippine Business for Social Progress, Staff House International, SEA Institute, Ateneo Law School, Puno Law and various Government Agencies.