SBS Full Year Net Income Up Nearly 60% to PhP159M
Quezon City—(PHStocks)—SBS Philippines Corp. (PSE: SBS), one of the leading chemical distributor/trading companies in the Philippines, continued to post solid profit growth as it registered a net income of PhP159 million for 2015, up by 58.73%, from PhP100.2 million posted in 2014. Operating profit grew by 40.1% in 2015 backed by organic growth, significant drop in finance charges on account of major debt pay downs in 2015 and increases in other income.
Sales revenues for the year were at PhP940 million, up from PhP933.1 million of the prior year. Food ingredients, industrial raw materials and feed inputs approximately accounted for 40%, 32%, and 21%, respectively, of 2015 sales revenues.
Sales of food ingredients and industrial chemicals accelerated in 2015 as the company benefited from the increased chemical consumption by the manufacturing and production sectors driven by the strong domestic private consumption. Compared to the prior year, food ingredient sales increased by 17% while industrial chemical sales grew by 29%. On the other hand, feed inputs registered lower sales in 2015 due to soft pricing conditions and keener competition.
2015 Fourth Quarter Results
While sales in the fourth quarter of 2015 grew and improved to PhP244.8 million compared to prior quarterly periods which posted P215.0 million in the 2nd quarter and PhP236.6 million in the 3rd quarter of 2015, sales in the fourth quarter declined by 14.6% in 2015 from the same comparable period in 2014. This slowdown was a result of the supply chain disruptions experienced in 2015 where some customers had some difficulty complying with the new stringent regulations affecting their use of certain staple chemicals. Moreover, the peso depreciation versus the US dollar also increased the landed cost of chemical supplies which caused some customers to hold back on their purchases to replenish their inventory purchases.
Net profit for the period was up by 8.9% compared to prior year comparable period due to lower expenses and increase in other income.
Financial Position
SBS continued with its strong financial performance in 2015 with the strengthening of its balance sheet and solid cash flow generation.
Total assets increased by 12.8% in 2015 to PhP3.8 billion from PhP3.4 billion in 2014. Total liabilities declined by 43.9% to PhP1.6 billion in 2015 from a high PhP2.8 billion in 2014, resulting in a much improved debt-to-equity ratio of 0.70X from 4.93x in 2014.
As of 31 December 2015, cash in bank stood at PhP837.6 million, up by 147.7% from PhP338.1 million as of 31 December 2014. This brings the liquidity ratio up to 2X from 1.29x in 2014.
Costs to income ratio also improved to 14.7% in 2015 from 19.0% % in 2014 as a result of a much lower interest expense.
Outlook
SBS expects revenue growth to accelerate this year as it anticipates stronger demand for chemicals in 2016. It expects to continue to deliver solid profit growth as it improves its operating margin through growth in higher margin products, cost reductions and other efficiencies.
The company also expects some price volatility for its chemical products in 2016 as the impact of the drop crude oil prices and commodity prices may begin to be felt in certain sectors in the energy and commodity value chains by the first half of 2016.