D&L Industries Inc., the country’s top specialty food ingredients and oleochemicals producer, is optimistic that the surge in its exports will continue to be a key growth driver, although it is exercising caution due to the uncertainties surrounding US tariff policies.

In a media briefing, D&L President and CEO Alvin D. Lao said the firm’s recurring income grew 10 percent to ₱681 million in the first quarter of 2025, driven by the continued growth in exports, higher biodiesel sales, and ramp-up of operations in the Batangas plant.

Exports continued their positive momentum in the first quarter of 2025, booking total sales of ₱4.8 billion, which is higher by 69 percent year-on-year (YoY). Meanwhile, export gross profits jumped by a whopping 90 percent YoY over the same period.

The average gross profit margin (GPM) for exports, 18.3 percent, is notably higher than the average GPM of 9.8 percent for the domestic business. This shows that exports remain a bright spot amidst increasing global uncertainty and volatility.

With low-hanging fruit and markets that have yet to be penetrated, D&L sees a significant potential upside for this segment. Over the medium term, the company targets exports to account for 50 percent of total sales. In the first quarter of 2025, export sales contribution stood at a record level of 34 percent.

“The year started with strong momentum. However, the increasing global uncertainties have led to a noticeable slowdown and dampening of global business sentiment,” said Lao.

He noted though that, “Nonetheless, the Philippines may be one of the least affected countries given its import-heavy trade balance. In addition, the lower proposed reciprocal tariff for the Philippines versus its neighboring countries may put the Philippines in an advantageous position.

“While volatility is likely to persist in the near-term, we remain unfazed and continue to focus on

building resiliency and long-term growth strategies. We believe that with our product portfolio, the majority of which cater to basic and essential industries, we will continue to grow and be relevant in an ever-changing business environment and world trade order,” Lao said.

D&L’s customers in the US continue to order products from the company although there is some hesitation due to the uncertainty and because consumers will have to shoulder the uptick in prices due to the higher tariff.

However, Lao pointed out that, D&L exports to many countries and “the US is not a large market for us. Our exports to the US is equivalent to roughly three percent of our total revenues. So we have 97 percent of our revenues that are not affected by Trump.”

Despite the macroeconomic noise, he said D&L still managed to book a 10 percent earnings growth for the quarter on the back of robust volume growth for both High Margin Specialty Products (HMSP) and commodities.

Total volume growth was robust for the period as both HMSP and commodities booked double-digit volume growth. HMSP was up 36 percent YoY while commodities were up 30 percent, bringing total volume growth for the quarter at 33 percent YoY.

The buoyant volume growth was driven by a combination of the strong exports, new customer wins, market share grab, and positive regulatory development with the increase in mandated biodiesel blend from two percent to three percent starting Oct. 1, 2024.

D&L’s Batangas plant continues to ramp up operations well into the first quarter of the year with net income growing by 35 percent quarter-on-quarter to ₱333 million and is seen to remain on the profitable track after initially being in the red due to start-up costs.

D&L’s food ingredients division delivered a stellar volume growth of 33 percent in the first quarter of 2025 as volumes for both HMSP and commodities were up double-digits.

The robust volume growth, coupled with higher commodity prices, drove a 65 percent increase in revenues for the quarter. Overall, the food ingredients division booked an 18 percent YoY growth in earnings.

Chemrez delivered a strong recovery in the first quarter of 2025 with earnings growing by 27 percent YoY for the period, mainly driven by the robust performance of the biodiesel division with the increase in mandated biodiesel blend.

The specialty plastics division takes a breather from the strong performance last year with first quarter earnings down five percent YoY. With 50 percent of this division’s revenues coming from wire harness for global automotive industry applications, the uncertainties related to tariffs have dampened the business sentiment in the sector.

While volatility remains, the company intends to continue to grow and keep itself relevant in this space by innovating and introducing new products that cater to Electric Vehicles (EV).

The Consumer Products ODM division saw its volume grow by 23 percent YoY during the first quarter of the year as inflation started cooling off.

Exports provide a new leg of growth with contribution to total sales currently at 13 percent from virtually zero about six years ago. Management sees export contribution to continue to go up over the long term.