Chemrez posts 31% profit jump

Publicly-listed Chemrez Technologies Inc. reported a 31 percent jump in unaudited consolidated net income for the first quarter of 2008 to P96 million from P73.2 million in the same period last year on the back of strong sales of biodiesel and green chemical.

Consolidated revenues for the first three months of 2008 reached P1.07 billion, 51 percent higher than the P709.4 million recorded a year ago.

The growth in revenue was attributed mainly to the contribution of wholesale biodiesel revenues during the period.

Other primary revenue drivers during the first quarter of 2008 were non-biodiesel oleochemicals such as glycerine and specialty chemicals for the soap and detergent industry, as well as emulsions for the paints and coatings industries.

For the three-month period, Chemreztech had a major shift in revenue stream as sales of “green chemistry” products accounted for more than 50 percent of consolidated revenues.

Green chemistry products are environmentally-friendly products that are variously characterized as low-toxicity, low waste, safer-handling and are made from renewable or inert raw materials.

Oleochemicals such as biodiesel and soap and detergent components are direct replacements for petroleum-derived materials that are inherently polluting and hazardous to public health.

ChemrezTech had also made substantial strides in widening its market for water-soluble resins and powder coatings that likewise provide cost savings benefits to customers.

Market share leadership from 2007 was still maintained across all product groups during the first quarter but this was offset by a tightening in profit margins that was necessitated by competitive pressures and the rising costs of imported raw materials.

Export growth remained positive for oleochemicals as it won more acceptance from multinational consumer care manufacturers who had been increasingly consolidating their capacity in mainland Asia .

 Although the appreciation of the peso relative to its year-ago level helped reduce importation costs, this was offset by increased dollar costs of key raw materials which was part of a worldwide trend of rising commodity prices.

 Pricing and marketing margins were calibrated to retain key customers, a number of whom had scaled back production after experiencing record demand in 2007.

In the light of lower gross profit margin, ChemrezTech closely managed operating expenses for the quarter and on a consolidated basis kept expenses at 4.2 percent of revenues as against 5.9 percent in the same quarter in 2007.

 Pre-tax profits were essentially at the same level for the quarter in 2007 but the income tax holiday benefit for the oleochemical segment drove net income after tax 31.2 percent higher for the first quarter over the same period in 2007.