Listed food ingredients and plastics manufacturer D&L Industries Inc., reported on Tuesday that its net income for the first quarter of 2016 increased by 12 percent to P576 million from the P512 million posted in the previous year, driven by the firm’s shift into higher margin specialty products.
In a disclosure to the Philippine Stock Exchange, the company noted that its revenues slightly decreased by 4 percent to P4.63 billion from the P4.83 posted in the same quarter of the previous year.
The firm attributed the decline in revenue to lower palm oil prices and commodity volumes.
For its food ingredients segment, the firm noted that it is seeing a ‘mix-driven transformation’ that favors high margin specialties, which now account for 60 percent of overall revenue.
“Driving the shift are consumer trends, which are evolving very fast, thus demanding shorter product development cycles, more differentiation, and logistical benefits that having a well-established domestic supply chain enhances,” D&L said.
D&L also noted that its engineered polymers business saw good recovery in the first quarter of 2016 as revenues for the segment increased by 14 percent.
For its aerosol business, D&L said net income for the segment jumped by 31 percent during the first 3 months of the year.
In a press briefing on Tuesday, D&L Chief Finance Officer Alvin D. Lao said the firm already hit its 12 percent growth target for the year in the first quarter alone, but noted that the firm will not revise its growth target, wary of volatility of the market.
“What we had targeted for the year was a 10-percent increase in net income and we hit 12 [percent]for the first quarter, but with so much volatility going on globally and with elections coming, we’re sticking to the same target. So it’s still 10 percent target for net income for the year,” Lao said.
Lao said the firm needs to be conservative with its target.
“I think after the first half, we may have a clear picture. We need to be conservative. But no harm in being conservative,” Lao said.
Meanwhile, the CFO noted that revenues might make a positive turn in the coming quarters despite slightly declining in the first three months of the year, with commodity prices starting to increase.
“We’re suddenly seeing some commodities starting to go up in price. If that happens continuously, then that would have a positive effect on our revenues but not much effect on our income,” Lao.
Moreover, Lao also clarified that the firm has already hit its supposed two-year market capitalization target of $1 billion earlier than expected.
“We already hit the one billion market cap in September 2014,” Lao said.
In 2014, the firm announced that it planned to hit a market capitalization of $1 billion by 2016. Lao said at present, the firm is already at $1.4 billion and targets to hit $2 billion market capitalization next.
“We hit the 1 billion in 2014. It’s possible, maybe 5 to 7 years from 2014. Just considering how we’ve been growing as a company, it’s possible,” Lao concluded.