Monday, May 19, 2008 Chemical firm income increases in 2008
CHEMREZ Technologies (ChemrezTech) Inc. reported that its un-audited consolidated net income for the first quarter of 2008 has reached P96.0 million, 31 percent higher than the P73.2 million in the same period last year on the back of bio-diesel and green chemical sales.
Consolidated revenues for the first three months of 2008 reached P1.07 billion, 51 percent higher than the P709.4 million recorded for the same period in 2007.
The company attributed the growth in revenue to the contribution of wholesale bio-diesel revenues during the period.
Other primary revenue drivers during the first quarter of 2008 were non-bio-diesel oleochemicals, such as glycerine and specialty chemicals for the soap and detergent industry, as well as emulsions for the paints and coatings industries.
The first three months of 2008 were also characterized by a major shift in ChemrezTech's revenue stream as sales of "green chemistry" products accounted for significantly higher than 50 percent of consolidated revenues.
For the same period in 2007 the national mandate for one percent bio-diesel blending was still in the process of implementation towards the May 6, 2007 start date for bio-diesel availability to the public.
Green chemistry products are environmentally friendly products that are variously characterized as low-toxicity, low-waste, safer-handling and are made from renewable or inert raw materials.
Oleochemicals such as bio-diesel and soap and detergent components are direct replacements for petroleum-derived materials that are inherently polluting and hazardous to public health.
ChemrezTech had also made substantial strides in widening its market for water-soluble resins and powder coatings that likewise provide cost savings benefits to customers.
"Market share leadership from 2007 was still maintained across all product groups during the first quarter but this was offset by a tightening in profit margins that was necessitated by competitive pressures and the rising costs of imported raw materials," Chemrez said.
The company also reported that export growth remained positive for oleochemicals as it won more acceptances from multinational consumer care manufacturers who had been increasingly consolidating their capacity in mainland Asia.
On the other hand, the appreciation of the peso, which helped reduced importation costs last year, this was offset by increased in dollar costs of key raw materials which was part of a worldwide trend of rising commodity prices that carried over from last year.
Furthermore, pricing and marketing margins were calibrated to retain key customers, a number of whom had scaled back production after experiencing record demand in 2007.
In the light of lower gross profit margin, ChemrezTech closely managed operating expenses for the quarter and on a consolidated basis kept expenses at 4.2 percent of revenues as against 5.9 percent in the same quarter in 2007.
Pre-tax profits were essentially at the same level for the quarter in 2007 but the income tax holiday benefit for the oleochemical segment drove net income after tax 31.2 percent higher for the first quarter over the same period in 2007. (MSN/Sunnex)
