The Philippine Economic Zone Authority (PEZA) has granted an extension for the start of commercial operations (SCO) for D&L Industries’ Batangas plant in light of delays in the delivery of equipment and machineries due to the recent surge in COVID-19 cases.
In a disclosure to the Philippine Stock Exchange, D&L said its SCO will be moved to May 2022 following the extension granted by the Board of the PEZA to wholly-owned subsidiary D&L Premium Foods Corporation (DLPF).
DLPF, which will manufacture various food ingredients to cater to the company’s growing export business, was originally slated for commercial operations by October 2021.
“However, in consideration of the challenges and delays encountered due to the recent spike in COVID-19 cases and subsequent reimposition of Enhanced Community Quarantine (ECQ) and Modified Enhanced Community Quarantine (MECQ), as well as shipping delays for equipment and machineries for the said plant, PEZA has granted an SCO extension to January 2023,” D&L said.
As such, Natura Aeropack Corporation (NAC), another wholly-owned subsidiary of D&L Industries which will manufacture coconut oleochemicals for various consumer care products, will now be the first plant to operate within D&L’s Batangas facility.
It will start its commercial operations in May 2022 as originally planned.
“While the COVID-19 pandemic and various mobility restrictions have caused challenges in the completion of our Batangas plant, we remain committed to this project,” said D&L President and CEO Alvin Lao.
He added that, “We see ever-growing opportunities in relevant industries in the new normal that we can tap into with this new plant. This is evidenced by the resilient and robust growth in our export sales which grew 84 percent year-on-year in the first quarter of the year.”
Lao assured though that, “Our existing capacity is still sufficient to serve requirements in the near term, as such the extension in the SCO should have no material impact on current operations.” D&L’s Batangas expansion sits on a 26-ha property in First Industrial Township – Special Economic Zone in Batangas. The ongoing expansion, also referred to as Phase 1, will occupy roughly half of the property.
The company has so far spent about P4.5 billion for the project. Remaining capex to be spent this year and in 2022 stands at about P3.5 billion.
Once completed, the new plant will be instrumental to the company’s future growth, in line with plans to develop more high value-added coconut-based products and penetrate new international markets.
It will mainly cater to D&L’s growing export business in the food and oleochemicals segment.
While the pandemic is still ongoing, D&L believes that the Batangas expansion is coming at an opportune time given the strong demand for high value coconut-based products in the export market.
Moreover, Lao said the company is now in a far better position to thrive in an adverse environment and a potentially protracted economic recovery period.
As the majority of the products that the company manufactures cater to basic essential industries such as food, oleochemicals, plastics and cleaning chemicals, the company sees continued strong demand ahead.
With all of the company’s business segments posting significant recovery in the first quarter of 2021, recurring net income for the period increased by 35 percent YoY to P695 million.
Including a one-time gain of P29 million related to the retroactive implementation of the CREATE Act in the year 2020, total net income for the quarter stood at P724 million, up 41 percent YoY.
Assuming that the first quarter 2021 income holds steady in the next couple of quarters, the company is set to at least reach its net income level in 2019.