D&L Industries Inc., the country’s largest green chemicals and food ingredients producer, is on track to post record profits this year as its nine-month earnings for 2022 reached a historical high.
In a press briefing, D&L President & CEO Alvin Lao said net income in the first nine months of the year grew 17 percent to P2.5 billion, almost at par with the full year income of P2.6 billion recorded last year.
“The firm’s earnings for the first nine months of 2022 represent the highest nine-month income level in D&L’s history, amidst a confluence of macroeconomic headwinds (volatile raw material prices, higher inflation and interest rates, and a weak peso) and an Omicron surge in January,” he noted.
The better-than-expected earnings were mainly driven by the continued reopening of the Philippine economy and stronger company exports. With the lowest alert level in place and the lifting of the mask mandate in open areas, economic activity and consumer mobility continue to pick up as people become more comfortable going out.
This is evidenced by the higher consumer traffic in retail establishments, higher occupancy in restaurants, and higher frequency of flights.
In the third quarter of 2022 alone, D&L booked a record net income of P910 million, which was up 18 percent year-on-year (YoY). The better-than-expected earnings were mainly driven by a wider economic reopening and exports seeing resilient growth.
The robust earnings also demonstrate D&L’s ability to weather various macroeconomic conditions given its diversified businesses, the essential nature of the products it manufactures, and its ability to adjust its selling prices regularly.
“With the strong earnings momentum so far this year and near-term catalysts such as the anticipated holiday-induced spending and the lifting of mask requirements indoors, our earnings are on-track to possibly exceed our record net income booked in 2018,” said Lao.
He added that, ““While global macro concerns remain, there’s a fundamental growth story within the company that’s proving to be resilient.”
“We look forward to the commercial operations of our Batangas plant starting next year. This will be instrumental in enabling our next leg of growth by helping to expand our global footprint and further advance our R&D and manufacturing capabilities,” Lao concluded.
Sales jumped 57 percent to P33.9 billion in the first nine months of 2022 from P21.53 billion in the same period last year, evidencing the company’s ability to pass on higher raw material prices.
D&L’s export business is proving to be resilient with Chemrez’s earnings growing by over 50 percent in the first nine months of 2022.
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.
Export contribution to total revenues in 9M22 stood at 33 percent, evidencing the company’s commitment to diversifying its revenue base by strategically growing its international customer base.
Coconut-based products under food and oleochemicals were the main drivers behind robust export growth in the period. Coconut oil continues to gain traction in the global market due to its perceived natural antiviral, antibacterial, and antifungal properties.
In addition, coconut oil remains a valued, sustainable substitute for petroleum-based raw materials used in many applications such as personal hygiene and home cleaning products.
Going forward, the company expects its foothold in coconut oil-based exports to strengthen especially as the company builds its capabilities to serve a wider array of international customers.
With the continued reopening of the economy, the food ingredients segment posted a volume growth of 24 percent YoY for the period.
With higher export market penetration and the strong demand for organic, sustainable, and natural coconut oil-based products, Chemrez’s earnings grew by 53 percent YoY for the first nine months of the year. Oleochemicals division, which was the main growth driver, saw its volume grow by 51 percent YoY.
Specialty plastics income increased by 12 percent YoY in the first nine months of 2022 while consumer products ODM, previously referred to as Aerosols, saw its income decline by 23 percent YoY partly due to higher raw material prices for the period and partly due to the normalizing demand for disinfection and sanitation products as the world moves towards the tail end of the pandemic.