D&L Industries Inc., the country’s top specialty food ingredients and oleochemicals producer, expects 2024 to remain a challenging but is cautiously optimistic that the environment may be better with more stable interest rates and raw material costs.

In an interview, D&L President and CEO Alvin D. Lao said that, because interest rates are starting at a higher level, “next year, even if the conditions are similar to where we are now,… I don't think interest rates will go up even more.”

He also noted that raw material and labor costs may not go up as much next year compared to the hikes in 2023.

“This year, we were hit not just with the higher interest rates, we were also hit by higher costs. A lot of raw material prices were moving up. And then there were a lot of increases in minimum wage, labor. For us, another factor was (expenses for the) new plant, equipment. So, next year, it will still be challenging, but of my assumptions are (rates and costs are) going to be the same level as this year,” said Lao.

D&L is also expecting more business coming in the next few months as more production lines in its new Batangas plant are completed and start production noting that it also takes time for orders from clients to come in.

“A lot of our customers need to certify the new plant. A lot of them want to come down physically to walk around in the loop to make sure everything is moving. So, it really takes time,” explained Lao, adding that even existing export customers the firm is servicing in its old facilities will need to recertify D&L because of the new plant.

D&L’s Batangas plant is more than double the capacity of all of the firm’s existing facilities combined and Lao said “it’s really setting us up for growth over, not just the next year or two, but for a much longer timeframe. It’s a good foundation for us to really add a lot more volume and business.”

Meanwhile, Lao noted that one of the possible challenges next year is the impact of the expected El Niño phenomenon on the cost of raw materials such as coconut oil and they are closely monitoring it.

However, he noted that the impact may be limited since D&L has existing agreements to pass on any changes in the cost of raw materials to its customers so its prices go up or down in tandem with commodity prices.

Another cause for optimism for D&L is the planned increase in the biodiesel blend next year by 50 percent to B3 or three percent coco-biodiesel to 97 percent petro-diesel. 

D&L’s subsidiary Chemrez Technologies, is the country’s biggest producer of quality coco-biodiesel. The increase in the mandated blend will have a large impact on its sales volume as well as margins because of the higher utilization of its biodiesel plant.