Chemical manufacturer D and L Industries Inc. (DNL) on Wednesday said its income in the first quarter rose 35 percent to P695 million, from the previous year’s P515 million, as all of its business segments saw a recovery.
At this rate, Alvin Lao, the company’s president and CEO, said DNL may surpass the company’s full year income in 2019. The company said, however, it would be hard-pressed to repeat its performance in 2018.
“It’s been a year into the pandemic and we find ourselves back into another round of enhanced community quarantine [ECQ] for two weeks and modified ECQ after. While the business environment continues to be less than ideal, we also find ourselves, as well as many of our customers, in a much better position operationally to navigate the current situation with minimal business disruption,” Lao said.
Unlike last year’s lockdown measures, he said this year’s return to ECQ and a “much moderate” MECQ are both less restrictive.
“Notwithstanding an apparent hiccup in the road to recovery, we believe that medium- to long-term business prospects are still intact. Our products generally serve basic industries. From our past experience, after every crisis, when recovery starts, we usually start seeing good growth in the businesses we are in,” Lao said.
Sales for the 3-month period rose 23 percent to P7 billion from last year’s P5.67 billion, as all of its businesses posted a double-digit increase led by its food ingredients group which grew 37 percent as many food companies are now better-equipped to service customers on a 100-percent takeout or delivery basis.
Chemrez grew at 17 percent; specialty plastics, 27 percent; and the aerosols group, which they now call consumer products, rose 35 percent, though still smaller in volume compared with the other groups.
In addition, lower income taxes due to the Corporate Recovery and Tax Incentives for Enterprises Act also boosted the company’s bottom line for the quarter by P32 million. The effective tax rate in for the first quarter stood at 18 percent as against last year’s 24 percent last year.
The company saw growth in its high margin products at 7 percent, the first time since the first quarter of 2019 when it increased by a mere 2 percent.
Revenue contribution of its exports rose to a record high of 34 percent to P2.3 billion from the previous year’s P1.3 billion. Coconut-based products under food and oleochemicals were the main drivers behind the robust export growth as coconut oil continued to gain traction in the global market due to its perceived natural antiviral, antibacterial and antifungal properties.
Coconut-based products are also sustainable substitutes for petroleum-based raw materials used in many applications such as personal hygiene and home cleaning products. The company sees continued strong coconut oil-based exports, which should offset some of the weakness in the domestic market in the near term.
The company said the expansion of its Batangas plant is in full swing. The company has so far spent about P4.5 billion for the project. Remaining capex to be spent this year and in the early months of 2022 stands at about P3.5 billion.
The said facility will mainly cater to the company’s growing export businesses in the food and oleochemicals segments. It will add the capability to manufacture downstream packaging, thus allowing the company to capture a bigger part of the production chain.
The company, meanwhile, has appointed Franco Diego Lao as its new chief financial officer, replacing Amorsolo Rosario, who retired after more than a decade with the company.
Franco Lao, the cousin of Alvin, has 21 years of experience with the company. He started his career with DNL as a product representative for Oleofats Inc., moving up to product manager then to supply chain manager for the business segment and then as the supply chain director for the entire company. He holds an accounting and marketing degree from the University of Western Australia.