Chemrez posts 11.4% profit hike

MANILA, Philippines – Chemrez Technologies Inc. (ChemrezTech) reported yesterday an 11.4 percent growth in net first semester income after tax to P308.5 million despite the tough economic conditions due to the global crisis.

The higher income pushed up earnings per share for the first half of the year to 23 centavos from 21 centavos, for the same period in 2008.

Sales volume jumped by 51 percent on the back of higher oleochemical and biodiesel sales as ChemrezTech remains the leading supplier to the local biodiesel industry, with a 50 percent market share.

Consolidated revenues reached P2.37 billion, down 3.2 percent from the P2.45 billion registered in the same period last year, as a result of pricing actions caused by considerably lower raw material prices amidst weakening global demand.

The bulk of revenues continue to be contributed by coco-biodiesel sales but these gains were partially dampened by the general soft pricing on account of much lower coconut feedstock costs and a more intensely competitive market environment.

Coco-biodiesel sales were driven by increased local requirements as the government mandate for biodiesel blend for all diesel sold in the Philippines was increased from one percent to two percent (B2) effective Feb. 6, 2009 pursuant to the Biofuels Act of 2006.

As of June 30, 2009, the DOE had registered 12 local bio-diesel manufacturers, with a total annual capacity of 395.6 million liters.

With the steadily increasing number of DOE-registered biodiesel manufacturers, ChemrezTech is facing greater competition, resulting in lower profit margins for biodiesel; the company expects that this trend of decreasing margins for the biodiesel business is likely to continue.

On the other hand, the non-biodiesel oleochemicals business continues to post the highest sales growth, with first half sales already reaching the company’s full-year performance in 2008.

ChemrezTech reported a gross profit margin of P402.8 million, up 17 percent compared to the 14.4 percent in 2008 while net profit margin improved to 13.0 percent from 11.3 percent in 2008. –Donnabelle L. Gatdula (The Philippine Star)