D&L Industries Reports First Quarter 2017 Results

May 16, 2017 – D&L Industries’ recurring net income reached P663 million, or earnings per share of P0.09, in the first three months of the year. This is 15% higher than last year. Earnings before interest and taxes were higher by 19% at P848 million.

Total revenues reached P6.3 billion, up 35% y-o-y. This was supported by strong domestic demand and accelerated export sales. In the first three months of the year, export sales grew 73% YoY, hitting a record high contribution to total sales at 24% from just 18% in full year 2016. 

Starting at the end of 2016, food exports picked up through the company’s partnership with Ventura Foods, following roughly two years of certification and audits. The food ingredients segment is now the biggest contributor to exports, with its export sales more than quadrupling this quarter. This segment contributed 44% to total export sales compared with 19% in full year 2016.

Meanwhile, gross margins continue to improve for the high margin specialty products (HMSP) which expanded by 0.7ppt to 26%. The robust growth in low margin commodity revenues, however, pulled down the group-wide gross profit margin for the quarter by 2.5ppts to 17%. Commodity revenues grew by 55% y-o-y while HMSP revenues grew 24% y-o-y. HMSP accounted for 58% of revenues while the remaining 42% was accounted for by commodities.

 Overall, net income margin compressed by 1.9 ppts to 11%. Annualized return on equity and return on invested capital for the period stood at 18.1% and 19.7%, respectively.

The company’s balance sheet remained robust with net gearing at a modest 15% and comfortable interest cover at 25x. As of end-March 2017, net debt stood at P2.2 billion. The company generated negative free cash flows of P84 million, as rising commodity prices increased working capital requirements.

Our company continues to see growth across all segments,” said President and CEO Alvin Lao, “The strong performance of our export business shows that our commitment to R&D and innovation is being appreciated overseas. Looking forward, we will continue to look for more ways to expand internationally to complement the growth in our domestic business.”

Food Ingredients

Food ingredients segment revenues were higher by 56% y-o-y to P3.6 billion. This was mainly fuelled by the strong growth in refined vegetable oils (commodity) and specialty fats and oils revenues which were up 95% y-o-y and 33% y-o-y, respectively. The surge in commodity sales, however, pushed the blended margin for the food ingredients group lower by 2.4 ppts y-o-y to 13.1%. High margin specialty food products nonetheless continued to see margin expansion at 1.4 ppts y-o-y to 24.4%. Overall, group volume grew by 14% while net income was up by 16%.

Oleochemicals & Other Specialty Chemicals 

Oleochemicals group posted a revenue growth of 17% y-o-y to P1.9 billion. This was largely attributable to the recovery of the higher margin Other Specialty Chemicals segment which saw its revenues and volume grew by 30% y-o-y and 22% y-o-y, respectively, after several years of decline. The recovery mainly came from the Polystyrene and Emulsion segment. 

Meanwhile, the biodiesel segment (low margin commodity), which contributed 46% to group revenues and 16% to group gross profits, saw its volume decline by 22%. As a result, total volume for the group fell by 9% while blended margin fell by 0.8 ppt to16%. Nonetheless, higher margin Specialty Oleochemicals and Other Specialty Chemicals made up for the decline in biodiesel contribution as net income grew by 18% y-o-y.

Specialty Plastics 

Specialty plastics revenues grew by 5% y-o-y to P683 million mainly on higher average selling price given higher raw material prices. 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 margin compressed by 1.7 ppts. Notwithstanding lower gross margins and volume, the specialty plastics segment posted 4% earnings growth.


Aerosols group posted the highest net income growth for the period at 73% y-o-y. This was mainly driven by the 27% volume growth and 3.7 ppts margin expansion. The growth was across the board with Maintenance Chemicals posting the highest revenue and volume growth at 103% and 88%, respectively.

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.