By Denise A. Valdez
Reporter
EARNINGS of D&L Industries, Inc. (D&L) slumped 18% in 2019, dragged by lower sales due to the late passage of the national budget and the rise in inflation and interest rates.
In a briefing in Makati City yesterday, the Lao-led manufacturing firm reported a net income of P2.62 billion last year, down from P3.19 billion in the year prior.
Sales dropped 16% to P22.39 billion, weighed by declines in revenues across its four business segments: food ingredients (-10%), oleochemicals and other specialty chemicals (-29%), specialty plastics (-11%), and aerosols (-6%).
Of last year’s net income, the non-food business of D&L recorded the biggest decrease: the chemicals segment tumbled 35% due to lower biodiesel sales, and the plastics segment fell 18% due to the weak global auto industry and indirect effects of the trade war.
“It was pretty much consistent with what happened in the first nine months. We talked about the factors that affected our net income: late passage of the budget, inflation and interest rates going up… But in 2020 wala na lahat ’yan [all of those are gone],” D&L President and Chief Executive Officer Alvin D. Lao said.
He noted, however, that the new challenge this year is the coronavirus disease 2019 (COVID-19) outbreak. “Lahat positive sana eh [Everything was supposed to be positive]. But unfortunately, coronavirus may cause more risk for us. We’re now unable to really say what the outlook is for the year,” Mr. Lao said.
But unlike other firms that may be taking a harder hit from the outbreak, Mr. Lao said D&L is relatively less dependent from China, with exports to the country comprising only about 2% of its total revenues, and imports of raw materials about 10%.
He added that the supplies D&L gets from China can easily be substituted with alternatives from other parts of Asia such as Malaysia, Thailand and India.
“Even if we lose China as a market temporarily, it looks like we’ll gain some share also. For example, a car manufacturing company that shuts down operations in China may start buying from (other countries). So we might get business from there,” Mr. Lao said.
He noted D&L has competitors from across its four business segments that are more reliant on China, so the company expects to benefit from the customers of these rivals. “It looks like we’ll be able to gain market share by grabbing back customers who are not able to source raw materials from China,” he said.
D&L currently holds a 40% market share in high margin specialties food ingredients and 15-20% for commodity food ingredients. For chemicals, its market share is 40% for the high margin specialties and around 15-20% for commodities.
It also has more than 50% share in the specialty plastics business, and more than 80% in the domestically made aerosol business.
“At the end of the day, people still have to eat, still need to live in a house, drive a car, have appliances. Fundamentally, I don’t feel it’s that bad,” Mr. Lao said about the possible impact of COVID-19 to D&L.
The company is allocating P6 billion for capital expenditures through 2021, which will fund the construction of its 26-hectare facility in Batangas. Its spending last year reached P1.55 billion, up from P456 million in 2018.
Shares in D&L at the stock exchange closed P7.05 apiece on Thursday, down 39 centavos or 5.24% from the previous session.
