D&L expects banner year after record 2022 performance

D&L Industries Inc., the country’s top specialty food ingredients and oleochemicals producer, posted record profits and revenues in 2022 and expects 2023 to be another banner year.
In a press briefing, D&L President and CEO Alvin D. Lao said the firm recorded its highest-ever net income in 2022, demonstrating a full recovery from the COVID pandemic despite a confluence of macroeconomic headwinds.
The P3.3 billion 2022 earnings exceeds the company’s previous record of net income achieved in 2018 by 4 percent and is 26 percent higher than profits in 2021. In the fourth quarter of 2022 alone, earnings were up 62 percent YoY to P777 million.
These results outperformed expectations and were mainly driven by strong consumer spending amid wider economic reopening and the company’s exports undergoing resilient growth.
The three biggest business segments of the company - food ingredients, oleochemicals and other specialty chemicals, and specialty plastics - all booked positive earnings growth for the year which were either at record highs or slightly below.
D&L said its robust earnings for the year demonstrate its ability to weather various macroeconomic conditions given its diversified businesses, the essential nature of the products it manufactures, and its ability to adjust its selling prices regularly.
Volatile commodity prices, higher interest rates, and weak peso had minimal impact on earnings.
“Just when we thought that we are at the tail-end of the challenges brought about by the pandemic, 2022 presented a fresh set of challenges which were mostly on the macroeconomic front,” said Lao.
He noted that, “Nonetheless, our record earnings this year demonstrated the resilience that we have built over the years through the various crises that we have gone through.”
“While risk remains in the form of elevated inflation, threat of a US recession, and a global banking turmoil, we are optimistic and focused on our long-term structural growth story,” Lao added.
The firm is looking forward to the commercial operations of its Batangas plant by the middle of this year.
“This plant will be transformational for us from a sustainable growth perspective. It will add the capabilities that will allow us to increase our relevance in the overall production chain and service new and bigger customers globally,” Lao said.
The contribution of the new plant by the middle of the year plus improving consumer spending and exports on the back of easing Covid restriction globally and the recovery of its high-margin businesses, Lao said D&L is looking forward to an even better performance in 2023.
Despite a confluence of volatile raw material prices, higher inflation and interest rates, a weak peso, and an Omicron surge early in the year, D&L performed better than expected mainly due to the continued reopening of the Philippine economy and stronger company exports.
Meanwhile, D&L’s export business is proving to be resilient with Chemrez’s earnings growing by 47 percent in 2022—largely driven by the higher export market penetration and higher demand for sustainable, organic, and natural coconut oil-based raw materials used in various health, personal, and home care products.
In last quarter of 2022, the company’s sales mix has started tilting back to high-margin specialty products (HMSP) as its revenue contribution inched up to 53 percent, bringing 2022 revenue contribution to 51 percent.
“Over time, as commodity sales normalize and as the company continues to allocate much of its resources in growing the HMSP business, D&L expects to see a continued increase in HMSP revenue contribution,” said Lao.