By Arra B. Francia, Reporter
D&L Industries, Inc. (DNL) said it remains on track to book a P3.2-billion profit for 2018, after net income by end-September rose by 13% year-on-year.
In a statement issued Friday, the listed plastics and oleochemicals manufacturer said net income reached P2.4 billion during the January to September period. For the third quarter alone, net income climbed 13% to P874 million.
“We really had a good third quarter this year,” DNL President and Chief Executive Officer Alvin D. Lao said in a press briefing in Makati on Friday.
Revenues however slipped by four percent in the third quarter to P6.91 billion, bringing the nine-month figure to P20.17 billion, higher by one percent year-on-year. The 26% increase in revenues from aerosols products tempered the seven percent decline seen in food ingredients. Revenues from specialty plastics and oleochemicals meanwhile grew by 19% and six percent, respectively.
Mr. Lao said the sales performance was dampened by lower prices of raw materials.
“Many of the raw materials we worked with like coconut oil, palm oil, prices are down significantly. Prices of coconut oil were down over 40%, palm oil prices are down 16% compared to last year, that had a negative effect on selling prices for products that use raw materials,” Mr. Lao explained.
Despite the flat revenues, the company grew volumes of high margin specialty products (HMSP) by eight percent, driving net income margin by 11.9%.
HMSPs account for 63% of the company’s revenues, while the remaining 37% came from the commodity business.
“The growth in the high margin side of the business is a reflection of our investments in R&D which allow us to increase our market penetration and to develop more complex and customized products for our customers,” the company explained.
DNL noted that 23% of its revenues for the nine months ending September were from exports, bulk of which are food ingredients.
The company delivered a free cash flow of P4.3 billion during the period, which it will be used to pay up debt.
“We’ve paid down our debt by a lot, and that’s timely because interest rates have been going up… Our interest expense for the first nine months of the year has actually gone up from last year, so despite the lower level of debt, our interest expense level has still gone up. It’s really a reflection of higher interest rates,” Mr. Lao said.
Shares in DNL were unchanged at P10.96 each at the stock exchange on Friday.