Manufacturing company D&L Industries Inc. said it expects a double-digit growth in net income this year, after profit climbed 12 percent to P2.28 billion in 2015.
D&L executive vice president and chief finance officer Alvin Lao said the anticipated growth in 2016 would come from all businesses.
“The port congestion that held back performance in late 2014 and first half of 2015 posed short-term challenges to the company, but also created a tremendous long-term opportunity,” Lao said.
“While [port congestion was] a setback to the specialty plastics business, it highlighted the importance of having a strong domestic supplier like D&L, particularly in such highly dynamic markets as consumer food and beverage,” he said.
Lao said the upcoming national elections would also boost sales and earnings, on strong demand for food, fuel and paint.
D&L reported a recurring net income of P2.29 billion in 2015, translating into earnings per share of P0.32.
Earnings before interest and taxes increased 13 percent year-on-year to P2.9 billion despite the 5 percent drop in revenues.
D&L said volume growth of specialties, led by food ingredients, more than offset the decline in commodities. In total, high-margin specialties accounted for 62 percent of revenues.
Margin gains in both specialties and commodities drove overall gross profit margin from 15.8 percent in 2014 to 18.3 percent in 2015, a record in the company’s 53-year operation.
“Notwithstanding the 10-percent decline in revenues due to lower vegetable oil prices, the improvement in the revenue mix of oleo-fats drove margins higher and resulted in a 19-percent increase in net income for 2015. Growth was fueled by increased volume and margin expansion in specialties, specifically specialty ingredients and food safety,” the company said.
D&L said oleochemicals grew robustly in 2015, with oleochemical specialties adding customers and entering new markets.
Biodiesel benefited from favorable macroeconomic conditions and also saw strong growth in volume throughout the year.
Combined, oleochemicals accounted for 65 percent of revenues of this division, with blended margins continuing to expand as growth in higher margin oleochemical specialties accelerated.
This mix improvement, fueled by growth in niche coconut oil applications in personal care, home care, health and nutrition, is expected to further enhance the business’ margin profile moving forward, the company said.
The company said in late 2014 until first half of 2015, the port congestion not only limited raw material importations but also impeded exports, resulting in volume losses.
“With situation at the ports vastly improving by early 2015, the decline bottomed out in the first quarter of 2015. By the end of 2015, quarter-on-quarter volume growth was positive for three consecutive quarters,” the company said.
D&L is a Filipino company engaged in product customization and specialization for the food, plastics and aerosol industries.
The company’s principal business activities include manufacturing of customized food ingredients, specialty raw materials for plastics and oleochemicals for personal and homecare use.