By Arra B. Francia, Senior Reporter
LISTED chemicals and plastics manufacturer D&L Industries, Inc. (DNL) may book a two percent decline in earnings for full year 2019, following a slowdown in sales volume seen during the first semester.
In a presentation Wednesday, the Lao-led company reported a net income of P665 million in the April to June period, 15% lower than the P784 million it posted in the same period a year ago. Revenues also fell 25% to P5.16 billion.
This brought DNL’s first half earnings to P1.41 billion, 7.5% lower year on year, following a 17% decrease in revenues to P11.04 billion.
“We really saw a weak second quarter…Volume was down over 10%, so overall first half volume was down by 9%,” DNL President and Chief Executive Officer Alvin D. Lao said in a press briefing in Makati yesterday.
DNL’s business is divided into food ingredients, oleochemicals and other specialty chemicals under the Chemrez group, specialty plastics, and aerosols. Food ingredients and Chemrez generate about 85% of the company’s revenues.
Mr. Lao downplayed the slump in sales for the period, explaining that this is due to lower prices of raw materials that is passed on to customers. Prices of coconut oil and palm oil, which accounts for about two-thirds of their raw materials, were down by 40% and 19%, respectively.
As a result, costs also went down by 29% to P3.996 billion for the second quarter and 21% to P8.64 billion for the first half.
Mr. Lao noted that the timing of the Easter holiday also affected their performance, since Easter was in April this year compared to March in 2018.
Revenues from exports also fell by 25% to P2.1 billion in the first half, reducing its contribution to total revenue to 19% from 21% in the same period a year ago. The company attributed this to lingering uncertainties in the trade war.
Sought for his outlook for the second half, Mr. Lao said he doesn’t expect volumes to “get much worse.”
“We’re going to try our best to do what we can. But if the second half is flat, that means for full year 2019 we’ll be down by roughly 2% from the previous year,” Mr. Lao said.
The company is banking on lower inflation, expectations of a more accommodative monetary policy, and the ramp up in government spending to help lift its performance moving forward.
Shares in DNL fell 5.5% or 55 centavos to close at P9.45 each at the stock exchange on Wednesday.