D&L optimistic about its prospects

D&L Industries, the country’s largest specialty foods ingredients, plastics and oleochemicals firm, remains optimistic of its prospects even as macro-economic factors weighed on its first half earnings.

In a press briefing, D&L President and CEO Alvin Lao said recurring income reached billion in the first six months of 2019, 7.5 percent lower than last year. Earnings before interest and taxes was lower by 5 percent at billion.

He said the decline in income for the period was a result of the confluence of external factors which dampened demand in industries that the company caters to.

The negative consumer sentiment due to the inflation scare last year persisted in the first half of the year while the delayed passage of the national budget translated to government underspending and weighed on demand.

While the budget was approved on April 15, government spending has been slow to pick up. Moreover, the earlier anticipated boost from elections spending did not materialize.

In addition, the company was also affected by the uncertainties in the global market brought about by the US-China trade war.

“While D&L does not export USbound products to China and vice-versa, overall negative sentiment resulted in cautious demand and uncertain projections from customers across various industries regionally and in the Philippines as well,” Lao noted.

He stressed that, “while unfavorable macro factors have weighed down our growth for the period, we believe that this is more of a one-off event, rather than something that is structural in nature.”

“looking into the second half of this year, there are more reasons to be optimistic given lower inflation, expectation of a more accommodative monetary policy, and ramp up in government spending with the Build, Build, Build program,” said Lao.

In addition, to cushion the impact of soft volume for the period, the firm has implemented cost saving initiatives across the company which translated to just single-digit growth in operating expenses against double-digit growth in prior years. The effect of this should carry on to the succeeding quarters. (JAL)