Chemrez income surges 572% to P353M in 9 months

Publicly-listed Chemrez Technologies Inc. posted a 572 percent increase in its net income for the first nine months of 2007 to P353 million from P52 million in the same period in 2006.

Chemrez Tech, a leading manufacturer of biofuels and environment-friendly industrial products, attributed the significant improvement in its earnings to the stronger economy and buoyant peso, as well as the continuous development of green products which led to stronger sales as consolidated gross revenues rose 60 percent to P2.74 billion during the period from P1.71 billion a year earlier.

Francis Caluag, ChemrezTech chief finance officer, said year-to-date recurring income was approximately 451 percent higher than the same period in 2006.

Net income for the third quarter alone stood at P154.8 million as against P11.7 million in the third of quarter 2006. These figures, however, are based on unaudited interim financial statements.

Caluag said the above-record growth of the domestic economy in recent quarters continues to benefit the company.

“Consumer spending, attributable in large part to strengthening inflows from overseas Filipinos, translated to increased sales of intermediate raw materials to industrial customers who are primarily engaged in food service and processing, consumer appliances, home furnishings, construction, soap and detergent, and consumer care products,” he said.

ChemrezTech is the country’s leading producer of biofuel and other environment-friendly industrial products such as water-based solvents, paints and resins that provide an alternative to traditional chemicals that emit harmful fumes and are non-biodegradable.

Most ChemrezTech product lines comprising the resins, powder coating and oleochemical product groups registered substantial volume growth over 2006. These includes innovative products that serve as biodegradable and safer alternatives to traditional industrial chemicals.

Resins and color dispersions contributed to a higher than expected 53 percent of aggregate revenues while powder coatings accounted for seven percent.  Notably, powder coating sales for the first nine months of the year had already attained over 90 percent of sales for the whole of 2006.

It is expected that the growth in ChemrezTech’s traditional business lines would carry forward into the final quarter of the year which is cyclically favorable to the company. 

At the same time, the growing strength of the peso also enabled ChemrezTech to effectively reduce its importation costs for its raw materials and improve profit margins while maintaining selling prices at competitive levels.

The first nine months of 2007 also showed the initial results of ChemrezTech’s engagement in the newly-emergent biofuels industry.

Approximately five months into the implementation of the Biofuels Act, the company’s coco-biodiesels and other oleochemical products contributed about 35 percent to consolidated revenues and about 53 percent of gross profits. 

Sales of biofuel and other coconut oil-based products during the third quarter rose nearly 430 percent from the first quarter of 2007 as ChemrezTech capitalized on its leading position in coco-biodiesel to obtain an average 55 percent share of the wholesale coco-biodiesel market that began in late April.

Coconut oil-based industrial products also performed better than expected as marketing efforts started bearing fruit with exports to leading soap and detergent multinational customers in South Asia and Southeast Asia.

ChemrezTech also maintained its exports of non-fuel grade coconut methyl ester (CME) to the Japanese market and continues to monitor developments in that country as it anticipates the phasing-in of the Japanese mandate for biodiesel. 

“The company expects its biofuel business to be anchored primarily in the local market until such time that viable export opportunities for coco-biodiesel present themselves,” said ChemrezTech chief operating officer Jun Lao.