D&L Industries Inc., the country's top specialty food ingredients and oleochemicals producer, is more optimistic about its earnings prospects for 2025 compared to last year.
In an informal media interview, D&L President Alvin D. Lao said this optimism stems from easing inflation and interest rates, increased spending due to the mid-term elections, and the expected recovery of the tourism and hospitality sector.
"These are tailwinds for the economy, and as long as the economy is doing well, we are a beneficiary," he noted, adding that another percentage point increase in the biodiesel blend in October will also boost earnings.
Lao explained that the Philippine economy, and consequently, D&L's profitability, has been challenged in the last two years because high inflation hurt consumers and affected their spending.
"If you look at how prices went up so much, especially during Covid everything was very expensive. Consumers' pockets really got hurt. Rice prices really went up in the last two years," he said.
However, Lao noted that "it looks like the peak price of rice happened several months ago. The price of rice has actually been coming down, and it's another sign that inflation is coming down.
"So, looking forward, it's making us more optimistic this year with inflation much lower. There's more breathing room now for consumers, so hopefully, it means more money to spend and a better economy."
He also observed that, while spending is higher during presidential elections, there is always an increase in consumer spending during mid-term elections, which should boost the local economy this year.
Meanwhile, Lao noted that malls and hotels were full last December, so there are signs of recovery in one of the sectors that has been lagging. He added that the Tourism Department expects international tourism numbers to return to pre-pandemic numbers this year.
Regarding the company's biodiesel business, Lao said, "demand is quite strong," and they are now operating at a higher capacity because of the increase in the mandated blend by 50 percent, from two percent to three percent, last October.
"From 40 percent capacity, we assumed we would be up by 20 percent to 60 percent. But, we understand that many other biodiesel suppliers may have had issues ramping up their capacity, so we might have gone even above 60 percent to make up for the other manufacturers who could not ramp up," he added.
With the scheduled increase in blend to four percent by October, Lao said they expect orders from oil companies to start increasing around two months before implementation, so sales should start increasing in the third quarter.