D&L to focus on high value products

MANILA, Philippines - D&L Industries Inc., a manufacturer of customized food ingredients, is focusing on the sale of high margin specialty products amid depressed commodity prices.

Sales from high margin goods through partnerships signed early this year will allow the company to jack up its earnings to almost P1.4 billion for the entire year, an official said.

“Our efforts are concentrated on the high margin customized products,” said Alvin Lao, executive vice-president and chief finance officer of D&L.

“What we are expecting is we will have projects that will be kicking in only in the second half of the year,” Lao said.

Early this year, D&L and its subsidiaries entered into marketing and distribution deals with Swiss firm Omya for calcium carbonate and leading Australian food ingredients firms Manildra Group and MSM Milling for high oleic canola and canola meal.

It also signed an original equipment manufacturing agreement with Japan’s leading chemical engineering company Showa Denko K.K. Under the deal, D&L Polymer will provide a full scope of services including export supply and local sales.

Lao said D&L is in talks with numerous companies for new partnerships in both plastics and food.

“Our products are considered very basic so if there is economic growth, you will see the effects in our products,” Lao said.

In the first quarter, D&L’s consolidated net income hit P314 million, up 19 percent from a year ago.

However, revenues dropped 27 percent to P2.3 billion as the group continued to sell less of its big volume, low margin refined vegetable oils like coconut and palm oil.

“Revenues fell for two reasons. One, we are selling less and two, commodity prices have fallen sharply,” Lao said.

But this is not a big concern as D&L continues to grow its high margin specialty products category, Lao said.

In the first quarter, commodity accounted for 31 percent of the sales, way below the 52 percent in 2009.

“It may still go down to high 20s but once commodity prices come back up, that will increase. But it will not come back to more than 50 percent,” Lao said.

“We will not lose that business because it serves as a feeder for raw materials for our specialty business,” Lao said.

D&L sees another banner year with profits expected to hit P1.38 billion this year from P1.33 billion in 2012.

D&L customizes food ingredients, plastics, biodiesel and aerosols. The company is principally into the manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use.