Chemical maker D&L Industries said its first-half income hit a record 1.63 billion pesos, up 17 percent from a year earlier of 1.39 billion pesos as economic activity accelerated during the period.
At the rate at which the company’s income grows, it could reach an annual profit of about 3.26 billion pesos, said Alvin De Lau, the company’s president and CEO.
“We are 7 percent higher than our 2018 income, which means we could have a higher income level than we did in 2018. So that’s good news,” Lau said.
In the second quarter alone, its income grew 22 percent to 851 million pesos from 700 million pounds a year earlier.
Meanwhile, sales grew 61 percent to 22.32 billion pesos from 13.9 billion last year. In the April-June period alone, its sales were even bigger as they grew 79 percent to 12.33 billion pesos from 6.9 billion pesos previously.
The company said the higher revenue is due to higher prices for the goods it can pass on to its customers.
“Besides the demand-supporting forces focused on economic reopening, we see a structural growth story for the company underpinned by our growing global footprint and enhanced R&D and manufacturing capabilities with the commercial operations of our new plant in Batangas by early next year,” Lau said.
“With this conviction, through our family holding company Jadel, we will continue to buy D&L shares as we see value emerging from currently low stock market valuations.”
Prices of some of the company’s main raw materials, such as coconut and palm oil, were volatile during this period, driven by recent global developments, such as the Russo-Ukrainian war and the temporary ban on palm oil exports by Indonesia.
The average price of coconut oil is up 25 percent as of June and the price of palm oil is up 57 percent, but those prices have posted slight corrections from recent highs.
The company said the exports division continued its momentum in the first half, with revenue jumping 69 percent during the period.
The contribution of exports to total revenue was 34 percent, with coconut-based products under food and oil chemicals being the main driver behind the strong export growth in the period.
In the first half, the company spent about 1.63 billion pesos in capital expenditures (capex), mostly to build its expansion plant in Batangas, which should easily double its current capacity when it becomes operational by next year.
As of the end of June, the company had spent about 7.8 billion pesos on the project. Quarterly capex actually peaked at 972 million pesos in the first quarter with second quarter capex declining at 660 million pesos.
The company said that once the Batangas plant is completed, the capex is expected to fall further as there are no other major expansions currently planned, and the company’s free cash flow may turn positive by next year.