D&L profit exceeds pre-pandemic level
D&L Industries, the country’s largest green chemicals and food ingredients manufacturer, reported a 31 percent jump in net income to P2.64 billion last year from the P2.0 billion earned in 2020.
During a media briefing, D&L President and CEO Alvin Lao noted that 2021 earnings already exceed the firm’s 2019 pre-pandemic profit of P2.62 billion.
The recovery was mainly driven by increased economic activity as well as the robust performance of the company’s export business in 2021. Total volume was up by 11 percent year-on-year (YoY) while the company’s export sales surged by 62 percent YoY.
With a lower COVID alert level in place and continued decline in new cases in the country, the company sees a build up in momentum and renewed business optimism for further recovery.
“Our business faced incredible challenges during the pandemic. Now emerging two years later on a better footing both operationally and financially, with our earnings already back to pre-COVID levels, we feel that the company has not only proven but also strengthened its resilience,” said Lao.
He noted that, “While we are cautiously optimistic that we are likely at the tailend of the pandemic, we remain focused on our core competencies, ready to ride another wave of volatility brought about by recent geopolitical uncertainties.”
While Russia and Ukraine are not a significant part of D&L’s supplier or customer base, Lao said the ongoing conflict poses a threat to global recovery and has sent prices of key commodities skyrocketing over a short span of time.
“In the near-term, we see demand affected by two opposing forces - continued economic reopening on one hand, and generally higher prices of basic commodities on the other,” he added.
Lao said that, “Nonetheless, while 2022 won’t be without difficulties, we continue to pursue areas of opportunities that will bring the next leg of growth for the company.”
With coconut oil continuing to gain traction globally as a natural and sustainable substitute to many petroleum-based raw materials, D&L plans to further capitalize on this by entering more export markets and by using its R&D expertise to introduce more highly specialized, coconut-oil based products.
“In addition, our Batangas expansion is expected to come online in January 2023 which will be a key milestone in boosting our export sales further,” Lao said.
Exports continued its positive momentum in the fourth quarter of 2021, jumping 81 percent YoY for the quarter, bringing full-year export sales value to a record P10.2 billion, up 62 percent YoY.
Exports now account for 33 percent of revenues, 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.
D&L’s food ingredients segment ended the year with net income higher by 70 percent YoY, just 15 percent lower than pre-pandemic levels.
With quarantine restrictions now easing across the country and in the economic hub of Metro Manila, the company anticipates that further recovery is set to continue. In addition, election campaign spending may provide an added boost to food companies.
Chemrez posted 15 percent YoY growth in net income while volume grew by 13 percent YoY. This boost in volume more than offset the overall margin compression of 7 percent due to a surge in coconut oil prices.
Specialty plastics income increased by 37 percent YoY, driven by higher volume which was up 7 percent YoY and a slight margin expansion of 0.3 ppt.
Moving forward, the company expects steady and consistent demand given the crucial role that plastics play during the current pandemic -- from various medical applications to packaging for parcel and food deliveries.
Consumer products ODM, previously referred to as Aerosols, continues to post strong volume growth. Total volume in this segment grew by 17 percent, as consumer demand for sanitation and disinfectant products remains strong in the new normal.