Delfi H1 earnings up 5.4% as margins come under pressure

Higher raw material costs pushed gross profit margin down to 25.7%.

Delfi Limited’s profit after tax and minority interests (PATMI) rose 5.4% year on year (YoY) to $16.51m (US$12.9m) in the first half (H1) of 2026, despite lower margins and earnings before interest, taxes, depreciation, and amortisation (EBITDA).

Net sales increased 2.7% YoY to $341.25m (US$266.6m), whilst gross profit margin fell to 25.7% from 27.5% a year earlier. EBITDA declined 3.7% to $29.95m (US$23.4m).

At constant exchange rates, PATMI grew 9.4% and net sales increased 2.9%.

Delfi said higher raw material costs weighed on its gross profit margin. The Indonesian rupiah depreciated 4% and the Philippine peso weakened 4.5% against the US dollar compared with H1 2025, affecting the group’s gross profit margin.

Own Brands sales increased 13.3% YoY to $221.31m (US$172.9m) across Indonesia, the Philippines, and Malaysia; whilst Agency Brands sales fell 12.4% to $119.94m (US$93.7m), following the company’s exit from an agency account in Indonesia in the third quarter of 2025.

Excluding the terminated account, Agency Brands sales increased 29% YoY.

Indonesia sales fell 2.7% to $201.73m (US$157.6m), whilst sales in regional markets rose 11.7% to $139.52m (US$109m).

Delfi generated $17.92m (US$14m) in net operating cash flow during the period.

Its cash position stood at $81.02m (US$63.3m) as at 30 June, after $4.86m (US$3.8m) in capital expenditure and a $13.44m (US$10.5m) dividend payment in May.

The company declared an interim dividend of 1.34 Singapore cents (1.05 US cents) per ordinary share, payable on 11 September. The dividend represents 50% of 1H 2026 PATMI.

“Our H1 2026 performance demonstrates the continued strength of our Own Brands, highlighting the underlying demand of our key brands even as we navigated a challenging cost environment,” said John Chuang, Executive Chairman and CEO of Delfi.

The company said it would continue to invest in its core brands and product innovation, whilst maintaining financial discipline.

Delfi expects volatility in the cocoa market to persist as expectations of a strong El Niño raise concerns over crop production. Cocoa prices have retreated from their 2025 peaks on expectations of a supply recovery but remain above 2022/2023 levels.

The company said the ongoing conflict in the Middle East could increase some operating costs through higher energy costs and currency volatility. It is managing purchases of materials that could be affected by these pressures.

Delfi said it would continue to monitor potential pressures on production costs and consumer demand, whilst investing in its brands, retail partnerships, manufacturing efficiency, and product innovation.

(US$1 = SG$1.28)