(Assumes 100% ownership of Chemrez Technologies for both 9M15 and 9M14 periods)

D&L Industries Announces Nine Months 2015 Results

Recurring Net Income at P1.66 billion, 13% higher y-o-y,
or EPS of P0.23
Revenues lower by 2% y-o-y on lower commodity prices
Increase in dividend payout policy to 50% of prior year's
consolidated recurring net income
Gross Profit Margin up 2.1ppts at 17.8% on improved mix
October 27, 2015 D&L Industries recurring net income reached P1.66 billion, or earnings per
share of P0.23, in the first nine months of 2015. This is 13% higher than the same period last
year. Earnings before interest and taxes were higher by 12% year-on-year at P2.08 billion.
Including the one-time costs on taxes and filings related to the increase in the authorized
capitalization in June 2015, net income for the period amounted to P1.61 billion, or an increase of
9% year-on-year. Revenues were down 2% as higher volume in food ingredients, oleochemicals,
and aerosols was tempered by weak commodity prices.
Lower palm and coconut oil prices held back refined vegetable oils volume. This was more than
offset by accelerating momentum in specialties, in particular volume and margin of oleochemical
specialties and food ingredients. Aerosols again delivered good results, while specialty plastics
modestly grew in the third quarter. In total, high margin specialties, which accounted for 61% of
revenues, outgrew commodities.
With the improving mix and sustained margin gains across all segments, gross profit margin
increased to 17.8% from 15.7% in 2014. The Company generated return on equity and return on
invested capital of 17.9% and 17.4%, respectively. Overall, strong volumes in specialties,
improved mix, and continued recovery of specialty plastics are expected to drive earnings growth
in the remainder of the year.
The Companys cash flow continues to benefit from the weakness in commodity prices. From
negative free cash of P157 million in the full year of 2014, the Company generated positive free
cash of P2.02 billion in the first nine months of 2015.
In addition to the increase in capital stock in June, long-term debt was introduced into the balance
sheet in July, providing further financial latitude. The P1 billion bank loan was fixed at 4% for 5
years, proceeds of which were used to partially settle short term borrowings. As a result, net debt
was further reduced to P2.90 billion from P4.21 billion at the end of 2014. Net gearing improved
to 0.24x from 0.38x as of end of 2014.
Product Mix
High-Margin Specialty Products
Low-Margin Commodity Products

FY14

9M15

59%
41%

61%
39%

Food Ingredients
Oleo-Fats focused on optimizing profitability across categories and delivering strong growth in
the high margin, high value businesses. In response to weak market prices and surging internal
requirements as feedstock for specialties, less volume of refined vegetable oils were sold in the
third quarter. Meanwhile, the Company made continuous headway in the specialty ingredients
and food safety space. Overall margins were up, resulting in 15% increase year-on-year in net
income. Revenues were lower by 7% year-on-year.
Demand for more differentiated offerings to address consumer preference for snacking and dining
is driving developments in retail and food service. During the period, R&D spend more than
doubled and customer base grew by 7%, providing good levers of growth in an increasingly
competitive marketplace for our customers.
Oleochemicals and other specialty chemicals
Specialty oleochemicals, which are now 19% of Chemrez revenues from 14% same period last
year, is continually exploring new avenues for growth in line with trends in sustainability and
health and wellness. In particular, it is leveraging innovative product development to capture
more value in exports through niche coconut oil applications.
Low fuel prices, increasing vehicle ownership, and in general the growing economy continue to
drive demand for transport and consequently, biodiesel. On the other hand, new developments
coming out of the specialty chemicals pipeline are expected to spur growth amid this years
subdued performance. Overall, Chemrez revenues were up 8% and net income was higher 38%
year-on-year.
Specialty Plastics
Year-to-date, volume is still down and revenues 11% lower than last year. However, sequential
quarter-on-quarter growth in volume continues, with third quarter volume already higher year-onyear after several quarters of decline. Net income was down 6% from last year.
Now that overall logistics conditions have improved relative to last year, the Company is
optimistic it will resume to positive growth in the very near future as efforts continue to bring
back businesses lost to port congestion. Longer term, focus will be on increasing collaboration
with global players in various industries, which today include wire harness and biopolymers, to
develop a stronger pipeline of higher margin, higher growth opportunities.
Aerosols
Aero-pack maintained good progress during the period, delivering various applications and
customized products to meet the needs of local brands and manufacturers. Sales of industrial
aerosols, which include maintenance chemicals such brake cleaners, grew strongest in the third
quarter, demonstrating how robust domestic car sales is driving demand for automotive
aftermarket products. Overall, revenues and net income were up 25% and 26%, respectively.
Going forward, the trend is still for consumers and households to focus discretionary spend on
home care and personal care products. These include development in areas of skincare, both in
aerosols and non-aerosol format.

Increase in dividend payout policy to 50%

No significant need for capital is expected in the mid-term. Currently, group-wide utilization rate
is below 60% with the completion of three new facilities in the past five years. Management
believes that the low funding needs for expansion and low leverage very well support the increase
in dividend payout policy.
Since the IPO in 2012, the Company has returned a total of P1.79 billion in cash to shareholders
through dividends. In addition, a 100% stock dividend was paid out in September. Against the
backdrop of improving returns, stronger balance sheet position, and good cash flow generation,
the Company wants to further boost shareholder value by raising the dividend payout policy from
25% to 50% of previous years recurring net income.

-end-

D&L Industries is a Filipino company engaged in product customization and specialization for
the food, plastics, and aerosol industries. The companys principal business activities include
manufacturing of customized food ingredients, specialty raw materials for plastics, and
oleochemicals for personal and home care use. Established in 1963, D&L has the largest market
share in each of the industries it serves, as well as longstanding customer relationships with the
Philippines leading consumer and chemical companies. It was listed on the Philippine Stock
Exchange in December 2012. For more information, please visit www.dnl.com.ph.

INVESTOR RELATIONS CONTACT

Nikka Maloles
Investor Relations Officer
D&L Industries
+632 635 0680
debmaloles@dnl.com.ph