D&L gets top rating for maiden bond issue

MANILA, Philippines — D&L Industries Inc., a leading food ingredients and chemicals manufacturer, received a credit rating of PRS Aaa with a stable outlook from Philippine Rating Services Corp. (PhilRatings) for its proposed maiden bond issuance worth up to P5 billion.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk.  This means that the obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

The assigned outlook is an indication as to the possible direction of any rating change within a one-year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators, and the general public.

“A stable outlook is assigned when a rating is likely to be maintained or to remain unchanged in the next 12 months,” PhilRatings said.

PhilRatings took into account D&L’s market position, the diversification of products offered and markets served; and that bulk of D&L’s revenues are from innovation-driven, high margin specialty products, which protect the company from keen competition.

It also noted that while D&L’s revenues have been fluctuating historically, its net income was generally on an uptrend prior to the pandemic while margins were maintained within a narrow band.

Proceeds of the bond issuance would be used to fund its expansion plant in Batangas, repay bridge loans and for general corporate purposes.

D&L has four principal businesses – food ingredients, oleochemicals and other specialty chemicals, specialty plastics and consumer products original design manufacturer.

From P2 billion in 2014, D&L’s net income grew to P3.2 billion in 2018, posting a compound annual growth rate of 12 percent.

However, growth was cut short in 2019 as demand was affected by the delay in the passing of the national budget which particularly affected the non-food segments.

The decline continued in 2020 due to the worldwide outbreak of the COVID-19 pandemic.

For this year, the company expects net income back to 2019 levels when it posted a net income of P2.6 billion.