D&L’s P5 billion bonds retain credit rating

MANILA, Philippines — Local debt watcher Philippine Rating Services Corp.(PhilRatings) has maintained its credit rating of PRS Aaa and stable outlook for D&L Industries Inc.’s  P5-billion fixed rate bonds.

PRS Aaa is the highest credit rating assigned by PhilRatings. On the other hand, an 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, meanwhile, is assigned when a rating is likely to be maintained or to remain unchanged in the next 12 months.

According to PhilRatings, the rating and outlook were assigned given the following key considerations: strong market position in the industries it is engaged in, diversification of products offered and markets served, innovation-driven specialty products, continued demand from customers, sustained profitability amid prevailing market headwinds, and relatively conservative debt management and adequate cash flow generation.

PhilRatings also took into consideration D&L’s growth despite the difficult environment during the pandemic.

“Amidst the pandemic, the company sustained its operations and achieved around 95 percent completion (to date) of its expansion facility in Batangas. Under its four business segments, D&L’s products are well diversified in terms of their applications in various industries and their target markets. The wide diversification in product offerings and customer base results in the balancing out of developments across the business segments,” it said.

D&L’s revenues likewise provide for geographical diversification, given that a sizable portion of the company’s revenues are from exports.

In the first half of the year, export sales accounted for 34 percent of total sales.  Sales are expected to increase once D&L’s Batangas facility starts operating by January 2023.

The facility will mainly cater to the export business of the food ingredients and oleochemicals segments.

D&L’s revenues grew by 61 percent to P22.3 billion in the first half.

During the period, net income was 17 percent higher to P1.6 billion.

In September 2021, D&L issued its P5 billion maiden bonds, proceeds of which were intended to be mainly used for the completion of the Batangas facility.