DNL income falls 23% in ‘20, but sees recovery in 4Q

CHEMICAL manufacturer D and L Industries Inc. said its net income fell 23 percent last year to P2.01 billion from the previous P2.62 billion, but the company saw a jump in earnings in the last quarter that it said will be an inflection point for its earnings in the succeeding quarters.

DNL president Alvin Lao said the company hopes to at least match its 2019 earnings by the end of the year, recovering what it lost in 2020.

“2020 was a challenging year to say the least. But at the same time, these extraordinary conditions further built our resilience and strengthened our conviction in our long-term strategies. It demonstrated the highly relevant nature of our businesses’ catering to basic industries, and our operational adeptness as even in the worst of times, even at the peak of the lockdown, the company never saw negative net income,” Lao said.

“In the final quarter of 2020, we managed to surpass pre-covid performance, with our net income growing 8 percent year-on-year. This accompanied the gradual opening of the economy and inspires confidence, as it shows that earnings growth is gradually coming back,” he said.

Income for the fourth quarter alone reached P637 million, up 8 percent from the previous year's P590 million. Lao said the company should sustain such level of income every quarter this year to reach its 2019 levels.

Sales last year fell 3 percent to P21.74 billion from the previous P22.38 billion, a narrower decline attributed to the strong performance of its non-food sector. For the fourth quarter alone, sales was flat at P5.8 billion.

“There is reason to believe that our 2021 results will likely be better than 2020. Furthermore, our products generally serve basic industries. From our past experience, after every crisis, when recovery starts, we usually start seeing good growth in the businesses we are in. As a sign of our confidence, we remain committed to our expansion plan in Batangas and the Lao Family continues to buy shares in D&L. The family has acquired about 91 million shares or 1.3 percent of outstanding shares so far since the pandemic started,” Lao said.

He said the company’s optimism largely stems from the performance of it’s non-food businesses. As of the fourth quarter of 2020, Chemrez’s specialty plastics and aerosols, which combined account for 75 percent of total earnings, are already operating above precovid levels.

The food segment, meanwhile, were still down since most of the restaurants and hospitality industries are still struggling in their operations as many people scrimp on eating out due to their lower income.

The food ingredients segment now accounts for 25 percent but compared to year-ago pre-covid levels, earnings for this segment in the fourth quarter were still lower by 45 percent, as various food companies still feel the impact of the lockdown; and foot traffic in malls and other commercial establishments remain well below pre-covid levels.