D&L Industries is confident of exceeding its pre-pandemic earnings this year after registering strong growth in the third quarter despite the reimposition of stricter quarantine measures.
In a press briefing, D&L President Alvin D. Lao said, the country’s largest specialty food ingredients, plastics and oleochemicals firm saw earnings recover strongly in the third quarter of 2021 with net income surging 25 percent to versus the third quarter of 2019.
Net income for the first nine months of 2021 is 7 percent higher than the same period in 2019.
Year-on-year, third quarter 2021 net income grew by 34 percent to P768 million. This brings earnings for the first nine months of the year to P2.16 billion, an increase of 57 percent from the same period last year.
“Our third quarter 2021 numbers place us in a good position to achieve full year pre-pandemic income levels, an outstanding achievement given the macroeconomic challenges that continue to weigh on economic recovery globally,” said Lao.
He added that, “While rising raw material prices affected our margins, we don’t see this as a long-term phenomenon given our ability to pass these changes on to customers every four to six weeks.”
While growth of high margin volumes slowed in the third quarter due to the stricter quarantine measures, Lao said that, “going forward, the prospects of our overall business look promising.”
On the domestic side, the government continues to roll out its vaccination campaign in Metro Manila and beyond, which provides support and justification for easing movement restrictions.
“This will provide another boost to economic activity and further recovery. In addition, we look forward to the onset of the Christmas season as we head into the last quarter of the year, as well as public spending ramping up in time for the elections in May next year,” Lao noted.
On the other hand, he said D&L’s overseas business stands to benefit from its Batangas expansion coming online next year, which will be a key milestone in boosting the firm’s export sales further.
He noted that they already have new customers waiting for their expansion plants to become operational so they can start placing large orders.
Lao explained that their current extra capacity can only allow them to accept small orders from new customers while those with large requirements can only be accommodated once the new plants come onstream starting next year.
With net income for the first nine months of the year accounting for 83 percent of 2019 net income, Lao said company is on track to hit pre-pandemic profit levels.
He notd that third quarter net income grew by 14 percent from the previous quarter, largely due to lower interest expenses and a 492 percent increase in other operating income, mostly attributed to forex gains.
Because the company’s exports are mostly denominated in US dollars, peso depreciation in the third quarter resulted in its exports having a higher peso value.
For the first nine months of the year, most business segments continued to post significant growth compared to 2020.
Consumer Products ODM, which is coming from an exceptional year due to the previous year’s surge in demand for hygiene and sanitation products, saw flatter results, as consumption of such items have stabilized over the course of the pandemic.
Nevertheless, the three larger business segments, which together account for 96 percent of revenues and 90 percent of net income in the first nine months of 2021, all saw significant growth in net income.
Exports continued its positive momentum in the third quarter of 2021, jumping 55 percent year-on-year. Exports now account for 32 percent of revenues, evidencing the company’s commitment to diversifying its revenue base by strategically growing its international customer base.