D&L seen earning P1.15 billion this year

MANILA, Philippines - D&L Industries, the country’s leading manufacturer of food ingredients and specialty plastic colorants and additives, is seen to post net earnings of P1.15 billion this year, up 18 percent from the previous year.

 “While this is not a profit guidance for 2012, you can simply assume a net income of about P1.15 billion based on the average monthly earnings of about P96 million for the first seven months of the year,” said D&L executive vice-president and chief financial officer Alvin D. Lao in a presentation during the firm’s initial public offering roadshow last week.

Lao added that average monthly earnings in the first seven months was significantly higher compared to the average of P47 million in the last five months of 2011 as the company benefited from a growing Philippine economy.

 “Our intent is to continue to grow the business so we may maintain that P96 million income a month,” he said.

D&L is considered an indirect consumer play since it manufactures products for use by food, electronics, fuel and health and beauty companies. It derives 80 percent of its revenues from the supply of food ingredients to the country’s top restaurant chains and branded food products.

The company’s strong research and development capabilities has allowed it to come up with thousands of proprietary product formulations customized to the requirements of its customers.

D&L  dominates every industry that it is engaged in, accounting for at least 50 percent of the fats and oil business and 54 percent in aerosol,  colorants and additives and oleochemicals.

The company is offering up to 1.07 billion common shares, representing 30 percent of its post-IPO outstanding capital, at a price ranging from P3.85 to P4.80 each share to raise between P4.12 billion and P5.14 billion.

Its majority shareholder Jadel Holdings Co. has an option to sell up to 15 percent of 160.71 million shares to foreign investors in case of strong demand, generating an additional P618 million to P771.41 million.

The company was originally looking to sell its shares at a maximum price of P5.85 apiece but decided to sell  at a lower price to leave something on the table for investors.

The offer price will be finalized on Nov. 26 or after the roadshow which kicked off Thursday.

The offering will run from Nov. 28 to Dec. 6 while the listing of the shares has been set on Dec. 12.

Roberto Benares, managing director at Maybank ATR Kim Eng Capital Partners, said D&L enjoys strong support from foreign investors given a consumer-driven economy.

“We did a pre-deal and it was positive.  Everybody wants to dip their hands into Asia, particularly in the Philippines because of its remarkable growth,” Benares said.

D&L intends to use proceeds from the offering for investments and acquisitions, payment of financial obligations and for general corporate purposes.