D&L targets up to 19% net income growth in 2017

MANILA, Philippines – D&L Industries Incorporated, the country’s largest customized food ingredients and oleochemicals firm, targets to hike its net income by 15% to 19% in 2017, banking on the strong domestic economy.

D&L president Alvin Lao said there is “underlying strength” in the economy, buoyed by increasing disposal income of households, which sustain growth of all of its businesses next year.

“The elections are over but people are realizing that the economy has underlying strength. The fourth quarter is doing good and we expect to grow earnings by 15% to 19% this year and next year if the economy growth continues.” Lao said.

“A 15% to 19% is quite respectable. We tend to underpromise but overdeliver. We don’t want to be too optimistic also.” Lao added.

Lao said the company’s financial performance will not be significantly affected by the weakening of the peso against the dollar, since the firm’s special relationship with customers allows the company to pass on any growth in the cost of raw materials.

At the same time, a stronger dollar will also help boost the company’s export revenues which now account for about 18% of its total revenues.

While exports are posting rapid growth, Lao noted that their export volumes are still low and consist mostly of food ingredients.

For 2017, Lao said D&L will allot about P345 million to P360 million for capital expenditures, up from the P300 million targeted capital spending for this year.

“We don’t have any large capex requirements in the next 6 months. The capex will be spread over all our businesses. We can easily borrow from our existing credit lines to fund our capex budget since our borrowing is very light,” said Lao.

From January to Septmenber 2016, D&L Industries posted a 19% growth in net income to P1.93 billion, on the back of higher commodity prices and sales volume.

Minus the one-time cost on taxes and filings related to the increase in its authorized capitalization in June 2015, recurring net income grew by 16%.

Nine-month revenues also went up by 10% to P16 billion. – Rappler.com