D&L Industries, Inc.’s P5 billion Fixed Rate Bonds have retained the highest PRS Aaa Issue Credit Rating with a Stable Outlook from Philippine Rating Services Corporation (PhilRatings).
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
On the other hand, a Stable Outlook is assigned when a rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said the rating and outlook were assigned given D&L’s strong market position in the industries that it is engaged in as well as the diversification of products offered and markets served.
Also considered were its innovation-driven specialty products protect the Company from keen competition and ensure continued demand from customers.
PhilRatings also factored-in D&L’s sustained profitability, amid prevailing market headwinds, and its relatively conservative debt management and adequate cash flow generation.
D&L continues to enjoy a solid market position in its four principal businesses—namely, Food Ingredients, Oleochemicals and Other Specialty Chemicals, Specialty Plastics and Consumer Products Original Design Manufacturer (ODM).
The Company has organically grown with the domestic industries it serves, with its businesses reportedly being either the country’s top market player or a close second in each of its respective industries.
Banking on its established track record and expertise in the business, the Company enjoys longstanding customer relationships with top consumer companies in the country.
Under its four business segments, D&L’s products are well diversified in terms of their applications in various industries and their target markets.
The wide diversification in product offerings and customer base results in the balancing out of developments across the business segments.
The benefit of such was highlighted in the shift of consumer preference amid the COVID-19 pandemic, where the lower sales volumes recorded for specialized and discretionary products were counterbalanced by the stronger demand for basic commodities.
The Company’s revenues likewise provide for geographical diversification, given that a sizable portion of the Company’s revenues are from exports. In the first half of 2022, export sales accounted for 34 percent of total sales.
Export sales are expected to further expand following the target commencement of operations in the Batangas facility by January 2023. The said facility will mainly cater to the export business of the Food Ingredients and Oleochemicals segments.
Furthermore, PhilRatings notes that D&L’s high margin specialty products (HMSP) segment—which benefits from significant barriers to entry—accounted for 49 percent of the Company’s revenues in the first half of 2022.
HMSPs are innovation-driven, tailor-made products that entail sufficient research and development in order to effectively cater to customers’ requirements and specifications.
D&L was able to sustain demand from customers in this segment, as shown by the strong sales figures for the first half of 2022.