D&L Industries Observes Improved Earnings as Batangas Plant Losses Narrow

In the first quarter of 2024, D&L Industries Inc., a notable player in the food ingredient and plastic manufacturing sector in the Philippines, reported a modest increase in earnings as operational losses at its Batangas plant significantly decreased. This improvement aligns with the company’s strategic objectives and forecasts for the year, particularly in enhancing its export business and financial stability.

Financial Performance Highlights

During the January to March period, D&L Industries achieved a profit of P618 million, marking a 4-percent rise compared to the same period last year. This positive outcome was further bolstered by a substantial 39 percent increase in revenue, reaching P8.8 billion. The uplift in earnings can be largely attributed to a recovery in export activities and a strategic focus on higher-margin products.

Alvin Lao, President and CEO of D&L Industries, shared with reporters the company’s anticipation for the Batangas plant, which they expect to break even in the second half of the year. This projection is set to play a crucial role in further enhancing the company’s earnings.

Strategic Developments at the Batangas Plant

Opened in July of the previous year, the Batangas plant represented a significant investment for D&L, valued at P10 billion. The facility was established with the intention of expanding the company’s global reach, particularly through the production of coconut-based products for food and oleochemical sectors. Despite initial challenges, the latest financial disclosures indicate that losses at the plant have narrowed considerably—from P315 million in its third quarter of commercial operations last year to just P16 million in the recent quarter.

This notable improvement is partly due to the strong performance of Natura Aeropack Corp. and D&L Premium Foods Corp., the subsidiaries operating the Batangas facility. These entities have not only met but significantly exceeded their export commitments to the Philippine Economic Zone Authority by 230 percent, attracting new clients and expanding their market presence.

Economic and Market Considerations

Despite broader economic uncertainties, including potential impacts on raw material costs due to geopolitical tensions, D&L Industries remains optimistic about its financial trajectory for 2024. The company’s optimism is also supported by the expectation of lower interest rates towards the year’s end, which could reduce the cost burden of its P15.5-billion debt.

Alvin Lao expressed confidence in the company’s financial management strategies, stating, “It seems that our interest expense level has peaked, so moving forward, as interest rates start to come down and as we slowly pay our debt, that means consequently more income for us.”

Outlook and Future Projections

Looking ahead, D&L Industries is poised to continue its positive momentum, with a targeted profit growth of at least 10 percent for the year. The strategic measures implemented at the Batangas plant, coupled with favorable economic conditions and effective debt management, are expected to significantly contribute to the company’s financial health and operational efficiency.

The ongoing recovery and potential growth present a promising outlook for D&L Industries, as it navigates through the challenges and opportunities of the global market, aiming for sustained profitability and expansion in the coming years.