DNL posts flat earnings growth as sales slide 8% in first 3 months

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D&L Industries, Inc. (DNL) reported flat earnings growth in the first three months of 2019, as inflation concerns in 2018 continued to affect consumer sentiment.

In a statement issued Tuesday, the listed plastic and oleochemicals manufacturer said recurring net income stood at P748 million in the first quarter, one percent higher than the P744 million it posted in the same period a year ago.

This followed an eight percent decline in sales to P5.88 billion from P6.4 billion in the first quarter of 2018.

“We saw negative consumer sentiment from last year spill over to the first quarter. This, combined with government underspending, affected our volume growth. However, macroeconomic indicators show that the business environment will improve going forward,” DNL President and Chief Executive Officer Alvin D. Lao said in a statement.

Mr. Lao also noted that the first quarter is not a seasonally strong period given that consumers are just coming from the holiday season.

DNL’s high margin specialty products accounted for 69% of its sales for the quarter, which is in line with the company’s goal to expand the high margin segment. Its margins also went up by 1.3 percentage points (pps) to 25%.

The commodity business, meanwhile, contributed 31% of total revenues, with margins up by 6.2 pps to 12.7%.

The company offers four types of products, namely food ingredients, oleochemicals — or chemicals derived from coconut oil, specialty plastics, and aerosols.

The contribution of exports to total revenues stood at 19% during the quarter, lower than 2018’s 24% and 2017’s 25%. The company attributed this decline to lower commodity prices that were passed on to customers.

“It’s not a big cause of concern for us because the last few years our exports have been doing very well….But at least in the pipeline we have many exports planned. We think near the end of the year makakahabol pa rin,” Mr. Lao said in a press briefing in Mandaluyong late Monday.

Asked if the company can still hit its double-digit growth target for the year, Mr. Lao said they are still reviewing it.

“We’re going to look at April and May in particular, now that the budget has been passed to see if the spending will come in. Then we will look at inflation. If people have the confidence again to buy, we need to observe that. Kasi kung mahina pa rin, definitely hindi kami tatama sa double-digit target,” Mr. Lao explained.

Shares in DNL dropped 1.82% or 20 centavos to close at P10.80 each at the stock exchange on Tuesday. — Arra B. Francia