MANILA, Philippines - Earnings of Chemrez Technologies Inc. (ChemrezTech) fell during the first half of the year due to high costs, but revenues surged on the back of the improving economy.
In a statement, the country's top biodiesel, resins and oleochemicals producer reported that its unaudited net income decreased by 15% to P262.9 million in January to June 2010 from P308.5 million in the same period last year because of significantly higher raw material costs and higher tax expense.
However, strong exports and the improving economy boosted the company's consolidated sales by 27% to P3.0 billion from P2.4 billion last year.
ChemrezTech said sales volume was also up, a sign that the economy has started to recover from the global crisis.
ChemrezTech's exports grew 15%, driven by high demand for amides and esters, which are used for the detergent, soap and cosmetic sectors in overseas markets. On the other hand, the firm’s various resin products have registered mixed volume results.
The revenue mix was 57% oleochemicals, with biodiesel remaining the main revenue driver; 39% resins; and 4% powder coating.
Overall, ChemrezTech said it has been able to maintain a leading market share in each segment.
Based on the company's unaudited financial results, cost of goods sold as a percentage of sales for the first half of 2010 inched up 4% because of higher raw materials costs. Higher cost of sales resulted in lower gross profit margin of 13% this year versus 17% last year.
Meanwhile, selling and marketing expenses increased by 12% to P47.7 million from P42.4 million due mostly to the huge increase in delivery expenses, which in turn, resulted from the increase in sales volume. Administrative expenses also increased by 12% to P42.5 million from P37.9 million and this could also be attributed to the increase in sales.
ChemrezTech's net profit margin fell to 9% from 13%, while earnings per share for the 6-month period decreased to P0.20 from P0.23.
Despite lower earnings in the first half, ChemrezTech is optimistic that it will continue to dominate the industries it operates in. The company maintains a strong position in the supply of resins for coatings, plastics, and construction while its powder coating business is looking to increase further its market share by introducing new products and increasing promotions on unique product lines.
Coco-biodiesel and other oleochemical specialties will continue to be the largest operating business of the ChemrezTech in 2010, contributing the majority of the Company’s revenues.