By James A. Loyola
D&L Industries, the country’s largest specialty foods ingredients, plastics and oleochemicals firm, is optimistic that the second quarter will be better than the first three months of the year.
In an interview after the firm’s stockholders’ meeting, D&L President & CEO Alvin D. Lao said the prices of commodities continue to remain low and this should put more money in the pockets of consumers.
He also noted that consumer spending is being boosted by the influx of foreigners while borrowing costs are expected to go down as the government’s move to reduce banks’ reserve requirements is injecting more liquidity into the market.
“While there is more liquidity, the cash requirements of corporations remain the same so banks will have to be more competitive by lowering their rates to be able to lend more,” said Lao.
However, Lao also noted that the second quarter has less working days this year because Holy Week fell on April while it was in March last year.
He also said that the elections had a lesser impact on consumer spending this year because of the delayed budget. “We didn’t see any impact because there was no budget,” Lao said.
During the stockholders’ meeting, D&L declared cash dividends amounting to P2.04 billion or an increase of 10 percent from last year’s P1.86 billion. This is equivalent to 64 percent of last year’s recurring income.
The dividends consist of a regular cash dividend of P0.223 per share plus a special cash dividend of P0.063 per share to shareholders of record as of June 26. Ex-date is on June 21 and payment will be made on July 22, 2019.
In total, shareholders will receive P0.286 dividends per share, or a dividend yield of 2.8 percent based on June 7’s closing price of P10.20.
In 2018, D&L Industries’ recurring net income reached P3.2 billion, or earnings per share (EPS) of P0.45, up 10 percent year-on-year, on the back of higher sales volume and gross profit margin expansion. The Company’s return on equity and return on invested capital were at 19 percent and 22 percent, respectively.
For the first quarter of 2019, net income increased by 1 percent year-on-year to P748 million, or EPS of P0.10. Annualized return on equity and return on invested capital for the period stood at 17% and 21%, respectively.
With positive prospects across its business segments, very low net borrowings and good cash flow generation, the Company remains highly committed to its dividend policy of 50 percent payout ratio based on previous year’s recurring net income, with an option to declare special dividends.
Including this year’s payment, the Company has returned a total of P8.8 billion in cash to shareholders through dividends since the IPO in 2012. The company also paid a 100 percent stock dividend in September 2015.