D&L Industries Inc. expects its second quarter growth to be stronger than in the first three months of the year despite rising costs as its businesses continue to improve with the reopening of the economy.

In a press briefing after the firm’s annual stockholders’ meeting, D&L President and CEO Alvin D. Lao said that, while election spending wasn’t felt in the first quarter, its sales bumped up in the April.

He also noted that the economy has picked up in the second quarter after the COVID surge in January to February and after the alert level was eased to the minimum.

“Airlines are reporting that things are almost back to normal. Traffic's almost back to normal. Restaurants are full again. More people are going on vacations. There are even graduation ceremonies and celebrations. So, the second quarter, at least in terms of economic activity, looks quite good,” Lao said.

D&L managed to grow its earnings by 12 percent in the first quarter of the year by 12 percent despite the surge and the imposition of stricter quarantine measures.

“If there is no new variant that will cause restrictions... I think a lot of companies whose performances are correlated with the economy should see quite good a performance not just this second quarter but for the rest of the year... and we will likely see that impacting us as a business also,” said Lao.

Meanwhile, D&L declared cash dividends amounting to P1.71 billion or P0.24 per share consisting of a regular cash dividend of P0.185 per share, plus a special cash dividend of P0.055 per share.

This translates to a dividend yield of 3.6 percent based on June 3’s closing price of P6.75. This year’s dividend amounting to P1.7 billion or an increase of 26 percent from last year’s P1.4 billion, is equivalent to 65 percent of last year’s recurring income.

Shareholders of record as of June 21 will be entitled to the cash dividend. Ex-date is on June 16 and payment will be made on July 15, 2022.

Including this year’s payment, the Company has returned a total of P13.2 billion in cash to shareholders through dividends since the IPO in 2012. The company also paid a 100 percent stock dividend in September 2015.

Management remains highly committed to its dividend policy of a 50 percent payout ratio based on prior year’s net income. D&L has also been able to declare special dividends for two years in a row now since it was paused in 2020 due to the uncertainties brought about by the COVID-19 pandemic.

In 2021, D&L booked P2.6 billion in net income. This is ahead of the pre-pandemic income recorded in 2019, despite stricter mobility restrictions in place for the majority of the year.

The positive earnings momentum continued in the first quarter of 2022 with D&L’s earnings at P780 million which was up 12 percent YoY, up 63 percent QoQ, and above pre-COVID income levels booked in the first quarter of 2019 and 2018.

First quarter 2022 earnings represent the highest quarterly income level for the company in three years despite the Omicron surge in January and soaring commodity prices caused by the ongoing conflict between Ukraine and Russia.

The strong earnings growth was mainly driven by the continued reopening of the Philippine economy and the implementation of a lower alert level. Consumer confidence and mobility continue to pick up as evidenced by the gradual return to normal of road traffic, dining in restaurants, and activity of both domestic and international flights.

D&L Industries stands to benefit from the gradual return to normalcy as higher economic activity typically translates to better business for the company.

Given the recovery in the domestic economy and the company’s growing export business, D&L’s expansion facility in Batangas which will be operational by January 2023 appears to be coming at an opportune time.

The new plant will give D&L additional capacity and upgraded capabilities which will position the company for long-term growth and will enable the achievement of strategic priorities.