D&L earmarks R420-M capex, declares R1.68-B cash dividend

D&L Industries, Inc., the country’s largest specialty foods ingredients, plastics and oleochemicals firm, is allotting R400 million to R420 million for its capital expenditures this year, up by 15 to 20 percent from the R314 million it spent in 2016.

In an interview after the firm’s annual stockholders’ meeting, D&L Industries President Alvin D. Lao said the capex will mainly be for the company’s growing working capital requirements since they have yet to finalize expansion plans.

Lao said they are still planning the expansion of the capacity of all of the company and its subsidiaries’ plants and expect to make an announcement in the next two months or within the third quarter this year.

While plant capacities are not yet at critical levels, Lao said “we are approaching the point where we need to plan ahead since it will take two to three years to expand and we do not want to be caught unprepared.”

Meanwhile, D&L ranked second on Campden FB’s (formerly Families in Business) Top 50 Global Challengers, a list of family businesses with impressive growth rates and turnover of between US$200 million and US$6 billion.

In line with this year’s theme of fast-growing mid-sized companies, D&L Industries was among two Philippine companies featured on the list, given its history of consistent earnings growth and profitability.

D&L Industries President and CEO Alvin Lao, together with second-generation managing directors Dean Lao, Jr., Lester Lao, and Vincent Lao were also included in Campden FB’s list of Top 50 Family Business Leaders of 2017.

“It’s an honor to be mentioned alongside such outstanding business families from all around the world,” Alvin commented.

He said “our first generation were entrepreneurs and built a strong foundation for our business. We in the second generation are working hard to keep that spirit alive, as evidenced by our company-wide focus on R&D and innovation. Going forward, we want to set the right framework for our business to prosper beyond the third and even fourth generation.”

During the stockholders’ meeting D&L declared a regular cash dividend of R0.185 per share plus a special cash dividend of R0.05 per share to shareholders of record as of July 27. Ex-date is on July 24 and payment will be made on August 10, 2017.

In total, shareholders will receive R0.235 dividends per share, or a dividend yield of 1.9 percent based on July 12’s close of R12.60.

This year’s dividend, amounting to R1.68 billion or an increase of 18 percent from last year’s R1.43 billion, is equivalent to 64 percent of last year’s recurring income.

In 2016, D&L Industries’ recurring net income reached R2.6 billion, or earnings per share (EPS) of R0.37, up 15 percent year-on-year, on the back of higher sales volume across all business segments.

With consistent profit growth, very low net borrowings and good cash flow generation, the Company remains highly committed to its dividend policy of 50 percent payout ratio based on previous year’s recurring net income, with an option to declare special dividends.