CHEMICAL manufacturer D and L Industries Inc. disclosed last Wednesday that it recorded its highest-ever net income at P3.31 billion last year, up by 26 percent from the previous year’s P2.64 billion, outperforming the company’s expectations.
The company’s income exceeded its previous high in 2018, an election year, when the company earned P3.18 billion.
In the October-to-December quarter alone, the company earned P777 million, 62-percent higher than the previous year’s P480 million.
The three biggest business segments of the company food ingredients, oleochemicals and other specialty chemicals, and specialty plastics all booked positive earnings growth for the year that were either at record highs or slightly below, the company said.
“While risk remains in the form of elevated inflation, threat of a US recession and a global banking turmoil, we are optimistic and focused on our long-term structural growth story. We look forward to the commercial operations of our Batangas plant by middle of the year. This plant will be transformational for us from a sustainable growth perspective. It will add the capabilities that will allow us to increase our relevance in the overall production chain and service new and bigger customers globally,” DNL President and CEO Alvin Dim Lao said.
Sales for the year rose 41 percent to P43.48 billion from the previous year’s P30.85 billion. For the quarter, the company’s sales only rose 3 percent to P9.58 billion from the previous year’s P9.32 billion.
Prices of some of the company’s key raw materials such as coconut and palm oil have been volatile for the year, driven by global events such as the Russia-Ukraine conflict and the temporary ban on export of palm oil by Indonesia, the company said.
Average coconut oil and palm oil prices have rallied 25 percent and 57 percent year-to-date, respectively, before correcting by 60 percent and 65 percent, respectively, from recent peaks.
“DNL maintains its ability to weather the volatility in raw material prices, as the company adjusts its selling prices regularly to reflect higher input costs,” the company said.
The events which transpired over the past two years have resulted in a change in sales mix favoring commodities, which the company has lower income. For instance, the pandemic resulted in a demand shift towards more basic raw materials while the various supply chain disruptions resulted in market share gains in the commodity segment as smaller commodity players were not able to operate. As a result of this, the company’s commodity business saw extraordinary growth in the period, translating to a 50-50 high margin products to commodity sales mix.
The company’s export business, meanwhile, is proving to be resilient with Chemrez’s earnings growing by 47 percent last year.
The growth was largely driven by the higher export market penetration and higher demand for sustainable, organic and natural coconut oil-based raw materials used in various health, personal and home care products. The export segment stood at P13.6 billion or 31 percent of the total company’s sales.
Lao said the company’s capital expenditures will significantly go down this year from the previous P3.49 billion, as the company completes its new Batangas plant.
“There will be be other major capex requirement in the pipeline,” he added.