LISTED plastics and oleochemicals manufacturer D&L Industries, Inc. (DNL) looks to continue its double-digit profit growth this year, after increasing its earnings by 10% in 2018.
DNL disclosed on Tuesday that net income reached P3.19 billion in 2018, higher than the P2.91 billion it posted the year before. This came amid a four percent decline in revenues to P26.54 billion due to lower coconut oil prices.
“Coconut oil prices are still down. Selling prices have come down a lot because of the lower average selling price,” DNL President and Chief Executive Officer Alvin D. Lao said in a press briefing in Makati City yesterday.
DNL said average prices of coconut oil declined by 39% last year, while palm oil prices also shed 14%.
High margin specialty products accounted for 63% of the company’s revenues, while commodities, or refined vegetable oils and biodiesel, provided the remaining 37%.
Meanwhile, exports contributed 24% to revenues, but there was an eight percent decline in peso terms due to the lower commodity prices.
DNL’s net income was flat at P785 million in the fourth quarter, after a 19% decline in revenues to P6.37 billion due to accelerating inflation during the period.
Despite the lower revenues, blended gross profit margin hit a high of 22% for the fourth quarter, bringing its full-year margin to 19%. Mr. Lao attributed this to the company’s ability to pass on price changes to customers.
“We have elections this year, so that will be positive for our business…We should see better results this year 2019,” Mr. Lao said.
“Our target is double-digit growth in net income, so the minimum is 10%….We don’t see coconut oil prices remaining low for long. When prices recover, then revenues should go up as well,” he added.
The company is also banking on inflation easing as well as improving trade relations between the United States and China to lift its business this year.
DNL will push through with its P8-billion expansion at its facility in Tanauan, Batangas this year, which will triple its capacity in the next two to three years. This is seen to ramp up the company’s export business, since it will have to export half of total production as per rules for Philippine Economic Zone Authority zone locators.
It will further give the company space to increase its production in the following years, as its utilization rate is now at about 70% across five plants in Metro Manila and one in Laguna.
Shares in DNL rose 0.36% or four centavos to close at P11.30 each at the stock exchange on Tuesday. — Arra B. Francia