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Chemrez Technologies forecasts 15%-19% profit growth this year

Chemrez Technologies, the country’s top biodiesel, resins and oleochemicals producer, projects its profits to grow 15 to 19 percent this year from the P318 million it earned in 2013 as the improving economy boosts sales of biofuel and coconut oil-based specialty chemicals.

In an interview after the firm’s annual stockholders’ meeting yesterday, Chemrez chief financial officer Alvin Lao said earnings actually grew by 39 percent in the first quarter of 2014 but “we want to be conservative by forecasting growth at the mid-teens. We don’t want to over-promise.”

Lao said growth is coming mainly from higher nationwide consumption of diesel as the economy picks up. The Biofuels Law requires all diesel sold in the country to contain 2 percent biodiesel and Chemrez has a 35 percent market share.

Chemrez is also generating sales and earnings growth from the production of specialty chemicals using coconut oil as raw material to replace petro-based chemicals.

The shifting trend towards environment-friendly oleochemicals from petro-based chemicals is boosting both domestic sales and exports of Chemrez.

Lao said the projected growth does not yet include the impact of the possible increase in the mandated biodiesel blend this year. While the government has already approved the increase in the blend to 5 percent from the current 2 percent, Lao said no timetable has been issued yet.

He expects the increase in blend to be implemented on a staggered basis, slowing rising from 2 percent to 3 percent and then one more percent added every 3 to 6 months until the blend reaches 5 percent.

Chemrez declared a regular cash dividend of P0.06 per share, as well as a special cash dividend of P0.06 per share. Shareholders of record as of June 18, 2014 will be entitled to both the regular and special cash dividends which will be payable on June 30, 2014.

In total, shareholders will receive P0.12 dividends per share, or a dividend yield of 2.8 percent based on May 30’s close of P4.24.

This year’s declared dividends of P156 million is a 33 percent increase from last year and translates to a payout ratio of 51 percent based on the 2013 total net income of P308 million.

Chemrez Technologies is highly committed on driving shareholder value. In 2007, it announced a P500 million buyback program, 55 percent of which already used to repurchase 96 million shares. During the same period, dividend payout ratio has averaged 41 percent.

With the strong results in 2013, Chemrez continues to generate solid returns for shareholders. Since 2007, Chemrez Technologies has spent P274 million on share repurchase and would have paid P1.15 billion in dividends, for a total of P1.43 billion in total capital returned to shareholders. (James Loyola)