D&L Industries Announces First Quarter 2016 Results

Net income at P576 million, 12% higher y-o-y, or EPS

of P0.08
Revenues lower by 4% y-o-y on lower palm oil prices
and commodities volume
Gross Profit Margin up 2.3ppts to another recordhigh 19.2% on sustained mix improvement
Net debt down to P245 million and net gearing lower
at 0.02x
May 3, 2016 For the first three months of 2016, D&L Industries net income reached P576
million, representing a 12% increase from the year prior. Earnings before interest and taxes
increased by 10% year-on-year to P714 million. Revenues came in lower by 4% at P4.63 billion.
The Company continues its favorable product mix shift to higher margin specialty products.
Contribution of high margin specialties to revenues increased to 64% from 62% in full year 2015.
As a result, overall gross profit margin for the period reached another all time-high of 19.2% from
16.9% the previous year. The Company generated return on equity and return on invested capital
of 17.3% and 20.2%, respectively.
Earnings were driven by the strong growth in Specialties on the back of increasing volume and
expanding margins. As expected, specialty plastics volume led growth, post - port congestion.
Specialties volume also saw double-digit growth in food ingredients, aerosols, and oleochemicals,
as well as continued increase in margins.
Commodity prices have remained soft for the first three months of the year and have had a
positive effect on the Companys cash flow. The Company generated P892 million in free cash
during this period.
The Company has very low net gearing. It continues to pay down debt, which it assumed for the
acquisition of Chemrez in 2014. As of end March 2016, its net debt position decreased to P245
million from P1.0 billion at the end of 2015. As a result, net gearing has been further lowered to
0.02x from 0.08x at the end of 2015.
Thoughtfully pursuing opportunities in the high growth, high margin space, as well as entering
exciting new markets in specialty ingredients, food safety, and oleochemicals, the Company is
positioned well for long-term growth. This shift satisfies goals not only of volume and margin
growth, but also of continuous value creation.
Product Mix
High Margin Specialty Products
Low Margin Commodity Products

FY15
62%
38%

1Q16
64%
36%

Food Ingredients
Within food ingredients, the Company is likewise seeing a mix-driven transformation, in favor of
high margin specialties, which now account for 60% of overall revenues. 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.
Growth in Specialties was in double-digit percent-wise, though tough year-on-year comparisons
for commodities drove overall volume down in the first quarter. This, combined with lower palm
oil prices year-on-year, brought revenues lower by 12%. Margins for both commodities and
specialties remained healthy, resulting in a 10% increase in net income.
Oleochemicals and Other Specialty Chemicals
The Company was able to slightly raise overall volume, with the consistent double-digit increase
in oleochemicals more than compensating for the persistent weakness in other specialty
chemicals, which are facing industry headwinds. Most of the latters businesses are in strongly
competitive markets and performance is expected to be supported by ongoing focus on delivering
further value and an improved range of products.
Overall revenues remained largely flat, though net income increased by 34%, driven considerably
by margins, which continue to rise as the Company seizes more value in its oleochemical exports.
The Company will continue to pursue developments in oleochemicals, seeking out new markets
and applications.
Specialty Plastics
Engineered polymers experienced good recovery in the first three months of 2016, with revenues
up by 14% on the back of strong volume growth. Following several quarters of decline, earnings
are back to positive growth, tempered by the lower margins attributable to the change in mix as
orders lost to port congestion come back. Net income was up 1% from the prior year.
The first quarter of 2016 has strongly indicated towards a recovery in specialty plastics, which
had been adversely affected by port congestion problems in the previous quarters. As the year
progresses, this division should benefit positively from the normalization of port operations,
which will allow the division to resume good growth momentum.
Aerosols
Coming off of a relatively weak fourth quarter last year, which was restrained by supply chain
bottlenecks, aerosols are now back to good growth in terms of volumes and margins. Sales
remained largely flat, with margins remarkably up driven by home care and maintenance
chemicals. Overall, net income grew 31% year-on-year.
Aero-Pack continues to foster lasting customer relationships through its broad suite of services
and capabilities in aerosol manufacturing and R&D. It is continuing to dominate the local aerosol
market through its successful diversification into home care, personal care and motor care
segments.
-end

D&L Industries is a Filipino company engaged in product customization and specialization for
the food, chemical, plastics, and aerosol industries. The companys principal business activities
include manufacturing of customized food ingredients, specialty raw materials for plastics, and
oleochemicals for personal and home care use. Established in 1963, D&L has the largest market
share in each of the industries it serves, as well as longstanding customer relationships with the
Philippines leading consumer and chemical companies. It was listed on the Philippine Stock
Exchange in December 2012. For more information, please visit www.dnl.com.ph
INVESTOR RELATIONS CONTACT
Nikka Maloles
Investor Relations Officer
D&L Industries
+632 635 0680
debmaloles@dnl.com.ph