D&L Industries Inc. reported that the start of commercial operations (SCO) for subsidiary Natura Aeropack Corporation’s (NAC) plant in Batangas will be moved to January 2023 instead of the original May 2022 schedule due to global port congestion and supply chain disruptions.
D&L President and CEO Alvin Lao, however, assured that the delay will not impact on supply requirements for coconut oleochemicals manufacturers. “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.” Lao said.
D&L disclosed to the Philippine Stock Exchange that a SCO extension has already been granted by the Board of the Philippine Economic Zone Authority (PEZA).
NAC’s Batangas plant, which will manufacture coconut oleochemicals for various consumer care products, was slated for commercial operations by May 2022.
“However, in consideration of the recent turn of events such as the Omicron-related surge in COVID-19 cases early this year, global port congestion and supply chain disruptions, as well as longer-than-expected processing of registration and licenses, PEZA has granted a SCO extension to January 2023,” the firm said.
As such, NAC and D&L Premium Foods Corp (DLPF), which is another wholly-owned subsidiary of D&L located at its Batangas site, will now start commercial operations concurrently. DLPF will manufacture food ingredients to cater to the company’s growing export business.
“While the pandemic has posed challenges to the completion of our Batangas plant, this expansion is coming at an opportune time given the strong demand for high value coconut-based products in the export market,” said Lao.
He explained that, “This is evidenced by the resilient and robust growth in our export sales which grew 55 percent YoY (year-on-year) in the first nine months of 2021.” “As the world moves beyond this pandemic, this plant will help us cater to emerging, relevant industries where we see opportunities for new growth,” added Lao.
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 P6.2 billion for the project. Remaining capex to be spent this year stands at about P1.8 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.
It will add the capability to manufacture downstream packaging, thus allowing the company to capture a bigger part of the production chain. For instance, while the company primarily sells raw materials to customers in bulk, the new plants will allow it to “pack at source.”
This means that D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products.
This will enable D&L to move a step closer to its customers by providing customized solutions and simplifying their supply chain, which is of high importance given ongoing global logistical challenges.
As of the third quarter last year, D&L’s earnings are already back to pre-pandemic levels with third quarter 2021 net income surging 34 percent to P768 million.
“With near-term catalysts such as the continued economic reopening and the boost from election spending, the company sees room for further earnings growth,” D&L said.