By James A. Loyola
D&L Industries, the country’s largest specialty foods ingredients, plastics and oleochemicals firm, reported that it has started to see some recovery in the local market amid easing restrictions while its exports remained resilient.
“The past couple of months have been extremely challenging due to various operational restrictions and as demand dried up in many industries,” said D&L President & CEO Alvin Lao.
He added that, “The month of April is likely the worst month as it’s the only month that was under 100 percent enhanced community quarantine to date.”
“In May, we saw a pick up in activity due to pent-up demand and as some restrictions were eased by the middle of the month. We expect further recovery in June as more and more of our customers are ramping up operations under general community quarantine,” noted Lao.
Under GCQ, restaurants and fast food chains have been allowed to utilize 30 percent of their dine-in capacity starting June 15.
“This should translate to better volume for the company’s food ingredients business which saw a significant drop in demand from the hotel/restaurant/caterer (HoReCa) sector during the first few months of the quarantine period,” said Lao.
In addition, the resumption of construction activities and public transportation, albeit on a limited scale, should help recover some lost volume in the other specialty chemicals and biodiesel segments under Chemrez.
“We saw steep declines in most of our businesses in the first quarter when we only had two weeks of quarantine. It is likely that the second quarter will not be any better considering strict lockdown measures were in effect for the months of April and May,” explained Lao.
However, he said “We are optimistic that improvements might be seen in the third quarter, but may still be below pre-COVID levels. A reasonable recovery might be more probable in the fourth quarter as Christmas period in the Philippines sets in as early as September.”
Lao pointed out that, “Filipino culture is very social. We love gatherings and meeting up with friends and family. I can sense that there’s still a lot of pent-up demand right now. So this could be positive once restrictions are eased further. This should help the country recover faster than most countries.”
“A possible monkey wrench, however, is a second wave that can return us to a stricter quarantine,” he warned.
While the domestic business has faced adversities on various fronts, we saw the company’s export business remain relatively resilient in the first quarter. In particular, this pertains to the export of coconut-based products under food and oleochemicals.
The interest in coconut oil continues to gain traction in the global market due to its perceived natural antiviral and antibacterial properties. It is also a great organic and sustainable substitute for many petroleum-based raw materials used in personal and home care products.
“The company sees continued strong coconut oil exports, which should offset some of the weakness in the domestic market in the near term. The company plans to capitalize on this trend as it develops more products and penetrates more markets globally,” said Lao.