d&l industries
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Strictly Private & Confidential
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Filipino Manufacturing Customized Specialty Products
Indirect consumer play
D&L Industries
Strictly Private & Confidential
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makes
CUSTOMIZED SPECIALTY INGREDIENTS for food and plas:cs
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0
5
10
15
20
25
30
>10 years 10-20 years 21- 30 years
Leng
th o
f Rel
atio
nshi
p in
Yea
rs
Customers
Longstanding Customer Relationships
Indirect consumer play
76% of sales are to Food & Beverage companies
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Fats, oils and other specialty food ingredients
Pigment blends, color and additive masterbatches and engineered polymers
Customize aerosol products for homecare, personal care and maintenance chemicals
C o c o - b i o d i e s e l , o l e o -c h e m i c a l s , r e s i n s a n d powder coatings
D&L’s 50+ years history of innovation
The D&L portfolio today
Colorants
Colorants, chemicals and additives for plastics and inks
specialty fats
engineered polymers
Aerosol
Corro-Coat, Inc. becomes
Biodiesel
C o r r o -Coat, Inc. IPO
Powder Coating
Pioneer Pioneer Pioneer
IPO
2012 2006 2000 1988 1987 1980 1976 1971 1963
Food ingredients Specialty Plastics Aerosols Oleochemicals & Other Specialty Chemicals
Fats, oils and other specialty food ingredients
Pigment blends, color and additive masterbatches and engineered polymers
Aerosol & non-aerosol products for homecare, personal care and maintenance chemicals
C o c o - b i o d i e s e l , o l e o -c h e m i c a l s , r e s i n s a n d powder coatings
72% / 41% 23% / 38% 4% / 6% equity investment / 8%
% of FY2013 Revenue / Net Income(1)
(1) The remaining 1% and 7% of revenues and net income, respectively, are D&L’s standalone, which are management fees from its related parties
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Our vision is to excel and be the
leader in the industries we serve
OUR MISSION Dedication to Growth Not complacent with status quo
Research orientation Finger on the pulse of the market
Productivity & Profitability But not at the expense of ethics
Quality & Value Good value for money and competitiveness in the marketplace
Market leadership Through creativity, innovation, and excellence
Pride in our employees They are our most valuable asset
Well-being of our communities As responsible citizens of the Philippines
Vision & Mission
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Established and Fully-Integrated Supply Chain
Key Benefits of Supply Chain Process § Know-how of entire supply chain process ensures that the company can anticipate and allocate the optimal
resources for transportation of its products § Not dependent upon third-parties to provide logistics
33,000 MT of oil storage capacity; 300,000 MT per annum refining capacity
6 barges with aggregate capacity of 10,000 MT for
raw material transportation
42 road tankers with total capacity of over 1,064 MT ensuring just-in-time
customer delivery
D&L’s integrated supply chain maximizes efficiency of working capital management
Fleet of barges Storage capability Interconnected ground transport system
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refined vegetable oils, specialty fats and oils, specialty ingredients
Colorants, Additives, and Engineered Polymers
Aerosol and non-aerosol products for homecare, personal care & maintenance
chemicals
Philippine Economic Zone Authority (PEZA) registered
44.5%
57.4%
100% 100% 99. 7%
55.5%
Jadel Holdings Co., Inc. (Lao family holding company)
Lao Family (Individual Family Members)
100%
11.1%
Public
31.5%
FOOD INGREDIENTS SPECIALTY PLASTICS AEROSOLS
OLEOCHEMICALS, RESINS, & SPECIALTY
CHEMICALS
Listed in 2000 as Corro Coat; Secondary Offering in 2006
Organizational Structure
Strictly Private & Confidential
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Dean L. Lao, 75 years old Chairman Emeritus § President of Oleo-Fats, Inc. § Founder of the Lao group of companies § Years of experience in D&L: 50 years
Yin Yong L. Lao , 61 years old Vice Chairman § T r u s t e e - A s s o c i a t i o n o f
Petrochemical Manufacturers of the Philippines
§ B.A. in General Studies from the Ateneo de Manila University
§ Years of experience in D&L: 39 years
John L. Lao, 59 years old President & Director § EVP/Director – Chemrez; Director –DLPC, D&L Powder Coating, FIC Marketing Co, FIC, OFI; Chairman/President – Aero-pack § B.S. in Business Administration from the University of the East in 1974 § Years of experience in D&L: 39 years
Dean A. Lao, Jr., 46 years old - Managing Director of Chemrez § Chairman - United Coconut Association of the Phils, Director - ASEAN
Oleochemical Manufacturing Group, President - Philippine Oleochemical Manufacturers Association & Philippine Biodiesel Association
§ Advanced Management Program of Harvard Business School § Years of experience in D&L: 18 years
Vincent D. Lao, 40 years old - Managing Director of Oleo-Fats § Previously Assistant Trader at Shuwa Co. Ltd. In Japan ,1994-1995 § B.A. in Economics and Japanese Studies from the University of Western
Australia § Years of experience in D&L: 18 years
Leon L. Lao, 71 years old Chairman & Director § President and CEO of Chemrez § Co-founder of D&L Industries, Inc. where he
currently serves as Director, President of First in Colours, Inc. and D&L Polymer Colours, Inc.
§ Years of experience in D&L: 50 years
Alex L. Lao, 68 years old Director § Alternate Director of Axis REIT § B.S. in Chemical Engineering from
Polytechnic Colleges of the Philippines in 1969
§ Years of experience in D&L: 42 years
Alvin D. Lao, 42 years old – EVP & CFO of D&L § CFO and Treasurer of Chemrez Technologies Inc.; Director of Axis REIT; VP of the Technology Club of the Philippines § B.S. in IT (Honours) and Statistics from the University of Western Australia, MBA from the MIT Sloan School of Management. § Years of experience in D&L: 16 years
Lester A. Lao, 44 years old Managing Director of First in Colours, Incorporated. § B. A. S. in Information Business from Edith Cowan University § Years of experience in D&L: 23 years
Senior management members have an average of 40 years of industry experience
Cesar Bautista, Independent Director - member of Institute of Corporate Directors - Director of Pilipinas Shell; Former UK
Ambassador; Former Chair and President Unilever Phils.
- Univ of Philippines Diliman & MS in Chemical Engineering from Ohio State
Filemon Berba Independent Director - member of Institute of Corporate Directors - Former President of Globe and Manila Water - University of the Philippines Diliman &
Wharton MBA
Seasoned and Experienced Management
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• One of the world’s leading chemical engineering companies
• Petrochemical, chemicals, aluminum, electronics, inorganic materials
DLPC Compounding manufacturing and distribution for local sales and exports
Bionolle Starcla
Starch-based eco-friendly
compound that is completely
biodegradable
BIOPOLYMERS Market potential in
Europe and Japan;
alternative to non-biodegradable plastic bags
DLPC DLPC to do
compounding and modification
FIC to handle marketing and
distribution
Ingeo - Plant-based
replacement for petrochem-based plastics & fibers
- results in 75% less greenhouse gases
than the oil-based PET plastic
• first to offer commercially available biopolymers derived from 100% annually renewable resources
News and Developments New Business Partnerships
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Oleo-Fats, Inc.
sales, marketing &
distribution of canola and
wheat products in
the Philippines
Canola Leading soft oil in the Philippine
market Consumption to
increase as disposable
income increases
Wheat
Noodles, Bakery, biscuits, snacks
Privately-‐owned Australian company principally engaged in wheat processing
a JV between the MacSmith brothers and the Manildra Group; into oilseed processing and packaging
Oleo-Fats, Inc. development & production of specialty oils & specialty
ingredients for the foodservice, retail and
ingredient manufacturing industries in the Asia-
Pacific region
Specialty Oils & Specialty Food
Ingredients
mayo, sauces, dressings, popcorn
oil, etc.
largest maker of vegetable oil-‐based products in the U.S
News and Developments New Business Partnerships
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2014 voted 3rd Best Mid-‐Cap Company in the Philippines
2013 added to the Global Small Cap Index
added to the Islamic Market ASEAN Index
candidate for Best Managed Company– Small Cap Category (Philippines)
one of the Top 50 Best Performing Philippine-‐listed Companies – ASEAN Corporate Governance Scorecard
News and Developments
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D&L Industries is commiDed to dona:ng 1% of its annual net income to corporate social responsibility programs through the Lao Founda:on
P16.9 million Amount spent on CSR initiatives in 2013
CSR initiatives are carried out through the
Lao Foundation
Education Value Formation
Leadership Livelihood
AREAS OF FOCUS
1,143 student and 28 teacher beneficiaries
Corporate Social Responsibility
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PROGRAM BENEFICIARIES Adopt-A-School Bagumbayan Elementary School
Teachers Salary Sponsorship Philippine Christian Foundation, Inc.
College Sponsorship Charity First Foundation, Inc.
LBL Educational Excellence Award Children of D&L Employees
ELL Teachers Welfare Program Retired teachers of Grace Christian College
English Literacy Project Various elementary schools in partnership with Binhi English Literacy Foundation
Community Outreach Communities where D&L plants are located
Corporate Social Responsibility
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Shifting sales mix: 66% High-Margin Specialties, 34% Low Margin Commodities
Gross Profit Margin
1H2013 Y-o-Y change
High Margin Specialty Products
25.1% +4.0 ppts
Low Margin Commodity Products
5.2% +1.1 ppts *Refined Vegetable Oils & Low Margin Specialty Fats
In line with strategic priorities
9M2014 Financials - Summary
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*Refined Vegetable Oils
Gross Profit Margin
9M2014 Y-o-Y Change
High Margin Specialty Products
23.6% -0.8 ppt
Low Margin Commodity Products
4.1% flat
PROGRESS ON OUR STRATEGIC PRIORITIES HMSP still key revenue driver
9M2014 Financials - Summary
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In Pmn
9M2014 Financials – Quarterly Net Income Perfomance
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In Pmn 9M14 9M13 Y-o-Y
Sales 10,624 7,685 +38% COGS & Cost of Services 8,859 6,254 +42% Gross Profit 1,765 1,430 +23% OPEX 322 241 +34% Operating Profit 1,444 1,190 +21% Equitized Earnings from Chemrez 131 79 +65% EBITDA 1,749 1,421 +23% Taxes 260 194 +34%
Net Income 1,293 1,043 +24% EPS* (in cents) 36.2 29.2 +24% GPM 16.6% 18.6% -2.0ppts
EBITDAM 16.5% 18.5% -2.0ppts
NIM 12.2% 13.6% -1.4ppts
*average number of outstanding shares: 3,571,428,995
9M2014 Financials
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In Pmn 3Q14 vs 3Q13 vs 2Q14
Sales 4,399 +60% +41% COGS & Cost of Services 3,724 +66% +43% Gross Profit 675 +33% +30% OPEX 133 +71% +138% Operating Profit 541 +26% +17% Equitized Earnings from Chemrez 60 +102% +59% EBITDA 663 +31% +19% Taxes 102 +55% +45%
Net Income 494 +28% +17% EPS* (in cents) 13.8 +28% +17% GPM 15.3% -3.1ppts -1.3ppts
EBITDAM 15.1% -3.4ppts -2.8ppt
NIM 11.2% -2.9ppts -2.3ppts
*average number of outstanding shares: 3,571,428,995
3Q2014 Financials
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Food Ingredients
43% Specialty Plastics
35%
Aerosols 5%
Management Service Fees
7%
Oleochemicals and Other Specialty
Chemicals 10%
Net Income Breakdown Management Service Fees
1%
Specialty Plastics
20%
Food Ingredients
76%
Aerosols 3%
Revenue Breakdown
9M2014 Group Results at a Glance
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Export/Sales
12% 13% 16% 17%
(Pmn)
12% 17%
+28% y-‐o-‐y
Exports
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In Pmn As of end Sep 2014
As of end Dec 2013
In Pmn As of end Sep 2014
As of end Dec 2013
Cash 2,260 3,438 Book Value 9,447 8,860
Current Assets 7,860 8,016 BVPS (in P) 2.65 2.48
Total Assets 11,279 11,403 Debt-to-equity (Borrowings/Equity)
0.12x 0.19x
Borrowings 1,143 1,662 Return on Equity 18.3% 15.9%
Total Liabilities 1,832 2,543 Return on Invested Capital1
25.3% 24.7%
1 Return on Invested Capital = (Recurring Opera>ng Profit + Equity earnings from Chemrez) / Invested Capital Invested Capital = Total Assets – Cash – Non-‐interest bearing liabili>es *Free Cash = Net Opera>ng Cash Flow – Capex
Group Balance Sheet and Cash Flow
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In Pmn
P1.12 billion NET CASH
Group Capital Structure
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Ex-Date 13 June 2014
Record Date 18 June 2014
Payment Date 30 June 2014
2.0% yield based on 24 June 2014 price of P9.82
D&L INDUSTRIES*
Dividend per Share
2013 2014
Total P0.15 P0.20
Regular P0.10 P0.10
Special P0.05 P0.10
CHEMREZ TECHNOLOGIES
Dividend per Share
2013 2014
Total P0.09 P0.12
Regular P0.06 P0.06
Special P0.03 P0.06
2.7% yield based on 24 June 2014 price of P4.40
Ex-Date 13 June 2014
Record Date 18 June 2014
Payment Date 30 June 2014
Dividends Dividend Policy* of 25% Payout Ratio
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Price as of 12/16 : P16.12
(+275% since listing, +167% y-o-y)
Market Cap as of 12/16: P57.6bn ; USD 1.29bn (USD1:P44.71)
All time high : P17.14 All time low: P4.32 Last 3-month average daily volume: 5.0 mn shares Last 3-month average daily turnover: P71.6 mn (USD 1.6mn)
Date Event Venue November 25-29 2014 JP Morgan Asia Rising Dragons Kuala Lumpur, Singapore, Hong Kong
February 2-3 2015 JP Morgan Philippines 1x1 Conference Manila
February 5 2015 Maybank Kim Eng Philippine Corporate Day Kuala Lumpur
March 4-6 2015 UBS Philippines CEO Forum Manila
March 11-13 2015 CLSA Asean Access Day Bangkok
Investor Relations
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