D&L Industries’ reports 9M21 results

November 10, 2021 – D&L Industries saw earnings recover strongly in the third quarter of 2021 (3Q21), with 3Q21 net income surging +25% vs. 3Q19 and 9M21 net income growing by +7% vs. 9M19. Year-on-year, 3Q21 net income grew by +34% to P768 million. This brings earnings for the first nine months of the year (9M21) to P2.163 billion, an increase of +57% YoY.

Management Perspective

“Our Q321 numbers place us in a good position to achieve full year pre-pandemic income levels, an outstanding achievement given the macroeconomic challenges that continue to weigh on economic recovery globally,” said Alvin Lao, President and CEO.

“While rising raw material prices affected our margins, we don’t see this as a long-term phenomenon given our ability to pass these changes on to customers every four to six weeks,” Lao added. “Separately, we noticed that YTD growth of high margin volumes slowed in the third quarter, as a result of the stricter quarantine measures that were reintroduced in August and persisted until mid-October. While we were able to maintain almost full operations amidst these lockdowns, dine in capacity was severely curtailed. However, going forward, the prospects of our overall business look promising. On the domestic side, the government continues to roll out its vaccination campaign in Metro Manila and beyond, which provides support and justification for easing movement restrictions. This will provide another boost to economic activity and further recovery. In addition, we look forward to the onset of the Christmas season as we head into the last quarter of the year, as well as public spending ramping up in time for the elections in May next year. On the other hand, our overseas business stands to benefit from our Batangas expansion coming online next year, which will be a key milestone in boosting our export sales further,” Lao concluded.

3Q21 net income higher than 3Q19 by 25%; 9M21 net income higher than 9M19 net income by 7%

The company saw its income surpass pre-pandemic levels with 3Q21 earnings +25% compared to 3Q19 and 9M21 earnings +7% vs. 9M19. This brings total net income for the first nine months of the year to P2.163 billion, which accounts for 83% of FY2019 net income and indicates that the company is on track to hit pre-pandemic profit levels. Lower corporate taxes provided by the CREATE law had a +4% impact on 9M21 net income.

3Q21 net income grew by 14% from the previous quarter, largely due to lower interest expenses and a 492% increase in other operating income, mostly attributed to forex gains. Because the company’s exports are mostly denominated in USD, peso depreciation in the third quarter resulted in its exports having a higher peso value.

HMSP volume posts a slight decline in 3Q21, down by -2.6% YoY; HMSP volume growth at +12% YoY for 9M2021

In 3Q21, the company saw a slight dip of -2.6% in HMSP volumes YoY, as the reimposition of ECQ, MECQ and Alert Level 4 resulted in Metro Manila being under some degree of restricted lockdown for the latter half of the quarter, due to the surge in COVID cases caused primarily by the spread of the Delta variant. While more relaxed guidelines were introduced for fully vaccinated individuals under Alert Level 4, these provisions were not introduced until September 15, meaning that dine in services, catering and hospitality services were still severely restricted. Under the latest round of ECQ, dining in services were completely banned, while under the subsequent round of MECQ, only 10% of indoor and 30% of outdoor dining capacity was allowed. The impact of these measures is highlighted in the relatively smaller volume growth posted by the food business of 4%.

For the first nine months of the year, most business segments continued to post significant growth compared to 2020. Consumer Products ODM, which is coming from an exceptional year due to the previous year’s surge in demand for hygiene and sanitation products, saw flatter results, as consumption of such items have stabilized over the course of the pandemic. Nevertheless, the three larger business segments, which together account for 96% of 9M21 revenues and 90% of 9M21 net income, all saw significant growth in net income.

Export growth continues positive momentum

Exports continued its positive momentum in 3Q21, jumping 55% YoY. Exports now account for 32% of 9M21 revenues, evidencing the company’s commitment to diversifying its revenue base by strategically growing its international customer base.

Coconut-based products under food and oleochemicals were the main drivers behind the robust export growth. Coconut oil continues to gain traction in the global market due to its perceived natural antiviral, antibacterial, and antifungal properties. In addition, coconut-based products are great sustainable substitutes for petroleum-based raw materials used in many applications such as personal hygiene and home cleaning products. The company sees continued strong coconut oil-based exports, which should offset some of the weakness in the domestic market in the near term.

Positive catalysts ahead, with the upcoming Christmas season, 2022 elections and national vaccination rollout

While COVID variants continue to emerge and contribute to uncertainty on economic reopening, the company remains optimistic on upcoming catalysts to aid near-to-medium term recovery.

From a consumer spending perspective, the second half of the year appears more encouraging with the early onset of the Christmas season in the Philippines which typically starts as early as September. Pent-up demand is anticipated to contribute to higher spending during the peak holiday season, subject to the further easing of movement restrictions.

Presidential elections in May 2022, which happens every six years, may also likely provide an added boost in economic activity. Election spending typically begins in the fourth quarter preceding the election. In the last Presidential election which happened in 2016, the company saw its total volume and income increase by 9% and 15%, respectively.

On the vaccination front, which is the true key to economic reopening, the country is making progress with about 25% of its population fully vaccinated. In Metro Manila, the main economic and commercial hub of the country, the overall vaccination rate is much higher, with 87% of its eligible population now fully vaccinated. Over the third quarter, millions of additional vaccines arrived in the country, with a recent count putting available vaccine doses at around 40 million.

Batangas expansion will position the company for long-term growth and enable the achievement of strategic priorities

D&L remains committed to its Batangas expansion and construction is in full swing. The company has so far spent over P5 billion for the project. Remaining capex to be spent stands at about P3 billion. In September, the company executed its maiden bond offering, successfully raising P5 billion to help fund the remaining capex for this expansion.

The facility will mainly cater to D&L’s growing export businesses in the food and oleochemicals segments. It will add the capability to manufacture downstream packaging, thus allowing the company to capture a bigger part of the production chain. For instance, while the company primarily sells raw materials to customers in bulk, the new plants will allow it to “pack at source”. This means that D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products. This will enable D&L to move a step closer to its customers by providing customized solutions and simplifying their supply chain, which is of high importance given logistical challenges in general.

D&L’s Batangas expansion will be instrumental to its future growth as it plans to develop more high value-added coconut-based products and penetrate new international markets. The company to-date has successfully made in-roads in supplying various raw materials and even finished products in several relevant fast-moving consumer goods (FMCG) categories in the new normal. It plans to further expand its global footprint and targets export sales to account for at least 50% of its total sales in the long-term.

Operational and financial resilience

While the pandemic presents various challenges, there are also equal opportunities for the company to build further resilience. With appropriate adjustments and operational contingencies already in place, the company believes that it is now in a far better position to thrive in an adverse environment and a potentially protracted economic recovery period. Moreover, as most products that the company manufactures cater to basic essential industries such as food, oleochemicals, plastics and cleaning chemicals, the company sees continued strong demand ahead.

From a capital structure perspective, the company is in a solid position to withstand external pressures. The company successfully raised P5 billion in September from 3-year and 5-year fixed rate bonds, bringing its total net debt to P6.6 billion. As of end-September 2021, gearing continues to remain manageable at 35% and interest cover at 33x. In addition, the cash conversion cycle for the period was lower at 119 days vs 127 days in 2020, given lower account receivables days and higher payable days.

Overall, the company’s profitability ratios remain healthy. Return on Equity (ROE) and Return on Invested Capital (ROIC) stood at 15.5% and 13.9%, respectively, in 9M21.

Segment Results

Food Ingredients

The food ingredients segment showed continued recovery from the previous year, with 9M21 volumes up by 4%, sales up by 39% and net income surging by 105%. With quarantine restrictions now easing across the country and in the economic hub of Metro Manila, the company anticipates that further recovery is set to continue as fully vaccinated individuals are granted more freedom of movement, especially when frequenting restaurants, hotels, and the service industry.


Chemrez posted 33% growth in net income in the first nine months of 2021, while volume grew by 13%. This boost in volume more than offset the overall margin compression of 5%. The margin compression mainly came from the Oleochemicals segment (chemicals derived from coconut oil), due to a surge in coconut oil prices. It takes the company 30-45 days to adjust prices to account for changes in prices of its underlying raw materials. As such, in an environment of rapid price changes, temporary margin contraction is possible. Nonetheless, the company sees its margins recovering in the succeeding quarters.

Specialty Plastics

Specialty plastics income increased by 46% YoY in 9M21. This was driven by higher volume for both engineered polymers and colorants and additives. Total segment volume increased by 21% YoY for the period. The company expects steady and consistent demand moving forward given the crucial role that plastics play during the current pandemic — from various medical applications to packaging for parcel and food deliveries.

Consumer Products ODM

Consumer products ODM, previously referred to as Aerosols, continues to post strong volume growth. Overall, volumes in this segment grew by +30%, as consumer demand for sanitation and disinfectant products continues to be strong amidst the pandemic. Total volume grew by 30% YoY, while net income was mostly flat, up +1% to P206m, due to lower margins in the personal care segment. This resulted from surging raw material prices as well as lower demand for higher margin personal care products. The company continues to mitigate rising raw material prices by passing on price changes to customers every 30-45 days. The company anticipates that this product segment will recover as quarantine restrictions are eventually eased, leading to greater foot traffic in retail outlets and more consumers resuming the regular use of personal hygiene products.


D&L Industries is a Filipino company engaged in product customization and specialization for the food, chemicals, plastics and consumer products ODM industries. The company’s principal business activities include manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use. Established in 1963, D&L has the largest market share in each of the industries it serves, as well as long-standing customer relationships with the Philippines’ leading consumer and manufacturing companies. It was listed on the Philippine Stock Exchange in December 2012. For more information, please visit //

This press release may contain some “forward-looking statements” which are subject to a number of risks and uncertainties that could affect D&L’s business and results of operations. Although D&L believes that expectations reflected in any forward-looking statements are reasonable, D&L does not guarantee future performance, action or events.

Crissa Marie U. Bondad
Investor Relations Manager- D&L Industries, Inc.
+632 8635 0680 /