EARNINGS: ChemrezTech says Q1 net income rose 28% to P205 million

Chemrez Technologies Inc. posted P205 million in net income for the first quarter, up 28 percent from P160 million a year earlier, biodiesel producer said in a report to the Philippine Stock Exchange over the weekend. Its net profit margin increased to 14 percent in the January-March period from 11 percent mainly the success of measures to bring down its raw materials costs, the company said. Its consolidated sales for the period rose 7 percent to P1.49 billion from P1.40 billion, with exports accounting for 14 percent of its revenues, the company said in a statement. It noted its revenue mix was steady at 63 percent from oleochemicals, 32 percent from resins, and 5 percent from powder coating. "Overall, ChemrezTech believes that it has been able to maintain a leading market share in all the industries it is in," it said. As a percentage of sales, its cost of goods sold was relatively lower than in the first three months of 2010 due to lower overhead and raw materials costs. This was a result of the company’s ongoing efforts to reduce its production costs while increasing efficiency and good timing in buying its raw materials, ChemrezTech said. Profit was higher early this year because of its material sourcing strategy, after the company correctly predicted that the cost of material costs will be higher this 2011, it said. ChemrezTech started beefing up its inventories toward the end of 2010 when the cost of raw materials costs were not yet that high. This is significant as around 90 percent of the company’s total cost revolves on the cost of raw materials, ChemrezTech explained. "Since cost of sales increased by only 5 percent while sales increased by a faster rate of 7 percent, higher margins resulted — translating to a 15 percent expansion in gross profit to P264 million in the first quarter versus P229 million in the same period last year," it said. Expenses for marketing rose by 11 percent to P25.5 million from P22.9 million in the same comparable period and were steady at 1.7 percent as a percentage of sales, according to its report. Other income — mostly foreign exchange gains — went up 333 percent to P13 million from P3 million as peso continued to gain on the US dollar. With such benefits from its importations, ChemrezTech said it profit before tax increased 23 percent to P229 million from P186 million. — VS, GMA News