CHEMICAL firm D and L Industries Inc. (DNL) on Tuesday said its recurring income grew 7.5 percent during the first half of the year to P1.35 billion, from last year’s P1.25 billion. However, DNL reflects a slower growth rate compared with the previous year amid election-related spending in 2016.
For the second quarter alone, the company said its profits were flat year-on-year (YoY) due to a higher base of earnings in 2016 as a result of national elections, a period when spending normally spikes.
Net income in the second quarter increased by a mere 1 percent to P688 million, from P680 million in the same period last year.
Alvin Lao, the company’s president and CEO, explained the company’s growth rate during the first half of 2016 compared with 2015 was at 22 percent.
“We believe this growth in 2016 came mostly from election-related spending,” Lao said in a briefing. He said growth this year would be at a single-digit rate.
Total revenues for the six-month period ending June reached P12.7 billion, up 24 percent from last year mainly driven by higher commodity prices.
Over the most recent two-year period, however, second-quarter earnings grew at an average of 11 percent YoY, the company said.
“We remain optimistic on all our business segments. Moving forward, our growth will continue to be supported by the vibrant domestic economy and still robust consumer spending,” Lao said. “Moreover, our export business offers exciting growth opportunities for us. We remain committed to our research and development investments that support the growing needs of our customers.”
Export sales grew 64 percent to P2.9 billion in the first six months of the year. Its exports now accounted for about a quarter of the total revenues up from last year’s 18 percent.
With the company’s partnerships with US food manufacturers Ventura Foods and Bunge Ltd. maintaining pace, the food ingredients segment is now the biggest contributor to exports.
The segment contributed 42 percent to total export sales as of June compared with just 19 percent for the entire 2016.
The food-ingredients segment grew its earnings by 7 percent in the first six months of the year as volume increased by 5 percent.
The oleochemicals segment increased its earnings by 14 percent despite weakness in the biodiesel business. Biodiesel, considered a low margin commodity, contributed 46 percent to group revenues and 23 percent to group gross profits but saw its volume decline by 33 percent.
Specialty plastics group posted flat earnings as it takes a breather from a faster-than-expected recovery from the port congestion in 2014, Lao said.
The aerosols group, meanwhile, remains the fastest-growing business of the company as it posted a 36-percent annual earnings growth in the first half of the year. The group now contributes 7 percent to its consolidated income compared with just 3 percent contribution five years ago, partly as a result of economic growth of the country.
Meanwhile, the company’s board of directors has appointed Joselito P. Rivera as its COO.
“This appointment is part of DNL’s efforts to professionalize its management team as the company continues to take on growth opportunities locally and internationally,” Lao said.
Rivera was the global head for leadership at Ericsson Corporate Headquarters in Stockholm, Sweden, for six years. Prior to that, he was with Ericsson Philippines for nine years where he held various management positions.