Manufacturing company D&L Industries said Tuesday it expects net income to recover in 2020 from an expected lower profit this year.
D&L president and chief executive Alvin Lao said in a news briefing that while the company might post a decline in net income this year, the business was expected to pick up next year.
“The company has faced a challenging environment in 2019, brought on by a confluence of external factors. However, we believe that we are at the bottom of the cycle in terms of net income decline, with 2019 marking the first year, since the IPO, in which D&L may post a decline in full-year net income,” said Lao.
“We’re already seeing signs of our business picking up, especially in the food segment where margins and sales mix are continuing to improve. Our expanded production capacity planned for 2021, with its improved capabilities, will place us in a strong position to increase our value to customers and further expand our export business,” he said.
D&L reported a net recurring income of P2 billion in the first three quarters, down 15 percent from P2.4 billion recorded in the same period last year. Nine-month sales also declined by 18 percent to P16.5 billion from P20.1 billion.
Lao said the third-quarter results showed emerging signs of recovery with volume from high-margin specialty products rising 15 percent quarter-on-quarter.
The food ingredients business also started to pick up with volume increasing by 7 year in the third quarter. The specialty ingredients segment within the food business, which has higher average margins, posted a 39-percent year-on-year increase in volume.
He said the domestic economic environment also improved with the continued easing in inflation, lower interest rates and reserve ratio requirement and ramp up in government spending.
“Looking internally, the company has made progress in key strategic initiatives which are fundamental and are indicative of future growth. The impact of the company’s investments in R&D can be seen in the margin recovery in several business segments. This is also a sign of the company steadily progressing up the value chain,” Lao said.
