D&L Industries 1Q18 earnings up 12.3% ranks among Philippines Best Mid-Cap Companies by Finance Asia

May 03, 2018 – D&L Industries’ recurring net income reached P744 million, or earnings per share of P0.10, in the first three months of the year. This is 12.3% higher than last year. Earnings before interest and taxes were higher by 11.9% at P949 million.

The High Margin Specialty Product (HMSP) segment continued its growth momentum in the first three months of the year. HMSP volume grew by 13% y-o-y, which is higher than the historical average of 7%. HMSP revenue contribution improved to 64% from just 58% in full year 2017.

The remaining 36% of revenues was accounted for by D&L’s commodity business that saw its margins improve meaningfully in 1Q18. Blended commodity margins stood at 6.5% in 1Q18 from just 3% in the same period last year. As a result, overall gross profit margin for the company expanded by 1.2 ppts y-o-y to 17.9%.

Exports as percentage of total revenue stood at 22% in 1Q18. Export revenues dropped by 5% y-oy, normalizing from above-average growth last year. Food and Oleochemicals were the largest contributors to export revenue, each contributing 34%. Moving forward, the company continues to work towards its target of having export sales account for 50% of total sales.

The company’s return ratios remain healthy. In 1Q18, Return on Equity (ROE) and Return on Invested Capital (ROIC) stood at 18.7% and 20.2%, respectively. Meanwhile, the balance sheet remains robust with net gearing at 18% and interest cover at a comfortable 21x. As of end-March 2018, net debt stood at P2.8 billion with average cost of debt at 4.06% (inclusive of DST). The company generated positive free cash flow of P941 million for the period.

Food Ingredients

The food ingredients segment posted flat earnings y-o-y in the first three months of the year. This stems largely from lower commodity sales as volumes fell 25%. In addition, the Holy Week holiday period, during which the company’s business operations are lighter than usual, took place in March this year vs April the previous year.

The high margin side of the business, meanwhile, saw volumes grow 13% which helped to offset the decline in commodities. HMSP now accounts for 61% of total revenues, a significant improvement from 51% in full year 2017. As a result, overall margins expanded by 1.7 ppts. A higher HMSP revenue contribution is a good indicator of future growth given that HMSP sales are more recurring and sticky compared to commodity sales.

Oleochemicals and Other Specialty Chemicals

Chemrez delivered 30% earnings growth in the first three months of the year. This was largely driven by the strong performance of the Oleochemicals segment which more than offset the weakness in the Other Specialty Chemicals segment.

Oleochemicals segment includes both high margin oleochemicals and commodity biodiesel. High margin oleochemicals continued its growth momentum, with volumes growing by 67% y-o-y in 1Q18. This was underpinned by the increasing appreciation of coconut-based products globally. Meanwhile, biodiesel saw its volumes recover, seeing growth of 5% y-o-y vs. a decline of 18% in FY17.

Specialty Plastics

The specialty plastics group grew its net income by 15% in 1Q18. Overall volume growth for the quarter stood at 9%. This was driven primarily by the volume recovery in Engineered Polymers division which was up 16% y-o-y. Meanwhile, volumes for Colorants & Additives division fell by 3% y-o-y as it starts to normalize, following a 42% y-o-y growth posted in the same period last year.


Aerosols group posted 5% y-o-y net income growth for the first three months of the year. Volumes were up 11% y-o-y. Meanwhile, blended gross profit margin contracted by 2.6 ppts due to higher raw material prices.

D&L Industries was among Philippines’ Best Mid-Cap Companies in FinanceAsia’s 18th Annual Poll

D&L Industries was named among the Philippines’ Best Mid-Cap Companies in FinanceAsia’s 18th Annual Poll.

D&L Industries was ranked 2nd, with Century Pacific and EEI Corporation taking 1st and 3rd place respectively.

FinanceAsia is a Hong Kong-based publication reporting on Asia’s financial and capital markets. Its annual survey provides an in depth analysis of Asia’s listed companies, their investor relations, commitment to corporate governance and social responsibility and acknowledges stand out performances in industry sector. This year’s survey results reflect the opinions of 140 portfolio managers and buy-side analysts.

This is the fourth time D&L industries was recognized as one of the best mid-cap companies in the Philippines. D&L previously won 3rd Best Mid-Cap in 2014 and Best Mid-Cap Company in 2015 and 2016. Alvin Lao, D&L’s President and CEO, had also previously won 2nd Best CFO in 2015. FinanceAsia classifies listed companies with market capitalization of at least USD 500 million to USD 1.5 billion as mid-cap.

“We are delighted to receive this recognition,” Mr. Lao remarked, “which highlights our continuous search for excellence in the industries we serve. Being named among such outstanding peers is a tremendous honor shared by the entire D&L team.”

The complete 2018 FinanceAsia 18th annual poll results can be viewed through this link