D&L reports 1748-million profit in first quarter

D&L Industries, the country’s largest specialty foods ingredients, plastics and oleochemicals firm, sustained its first quarter earnings at 1748 million as it continues to grow its profit margins.

In a press briefing, D&L President and Chief Executive Alvin D. Lao said that, “as a reflection of the company’s investments in R&D to move up the value chain, all four business segments saw their margins recover in the first quarter of 2019.”

This led to a 3.1 percentage point expansion in overall gross profit margin which stood at 21 percent for the period.

In terms of sales mix, the company saw its HMSP (High Margin Specialty Products) revenue contribution reach a record high of 69 percent in the first quarter of 2019.

D&L continues to focus much of its resources in growing the high margin side of the business. HMSP margins also improved to 25 percent, up 1.3 ppts from the same period last year.

Its commodity segment, accounting for 31 percent of total revenues, continues to see its margins at a favorable level. In the first quarter of 2019, the blended commodity margin stood at 12.7 percent, up 6.2 ppts y-o-y.

“This reflects the company’s efforts to consciously focus on margin-accretive commodity sales. However, given the nature of commodities, these double-digit margins are unlikely to be sustained,” Lao noted.

He noted that, “this segment remains a vital part of the company’s overall business, given the strategic role it plays in developing and growing the HMSP business.”

Meanwhile, volume recovery was tempered by macroeconomic factors that have continued to weigh down aggregate demand.

“The negative consumer sentiment that restricted spending behavior last year has persisted in the first quarter of the current year. In addition, the delay in budget approval also resulted in government underspending which the Bureau of Treasury estimated to be as much as 11 billion per day in the first quarter,” explained Lao.

However, looking forward, Lao said positive economic developments such as continued easing in inflation given the oversupply of key food items, anticipated ramp up in government and consumer spending, given the passage of 2019 budget and elections in May, and a more accommodative monetary policy, should all translate to a better growth for the economy in general.