D&L Industries Inc., the country’s top specialty food ingredients and oleochemicals producer, is “enthusiastically optimistic” that it will post better growth this year, spurred by near-term catalysts that will benefit both its domestic and export businesses.
In a media briefing, D&L President and CEO Alvin D. Lao said that among these factors is the continued ramp-up in its Batangas plant, which has turned profitable earlier than expected.
He said earnings from the plant should continue to grow from both exports and the domestic market as utilization increases and operational efficiencies are realized. In the fourth quarter of 2024, the plant generated net income of ₱244 million for 2024, with ₱248 million earned in the fourth quarter alone.
Lao said growth will also come from the increase in biodiesel blend to four percent (B4) by October 1, 2025, and to five percent (B5) by October 1, 2026, and they are now repurposing some production lines in preparation for the higher demand for biodiesel.
D&L also expects a boost coming from election-related spending since national elections typically lead to higher spending, particularly benefiting the consumer sector driven by various campaign-related activities.
Lao said they are also optimistic because of the general economic recovery with lower interest rates and RRR cuts, recovery in the tourism sector, higher infrastructure spending, and resilient OFW remittances are among the key economic drivers likely to foster growth throughout 2025.
The firm is also expecting arbitrage opportunities arising from potential tariffs as changes in trade policies generate short-term price differences across markets.
For example, commodities subject to tariffs might command higher prices in the regions enforcing them, while unaffected markets could benefit from artificially lower prices, enabling companies to capitalize on the resulting gap.
“In our view, the apparent trade tensions between the US and China present opportunities for companies like us to supply to companies who cannot source from either the US or China. Our new plant in Batangas gives us the capacity and capability to cater to bigger export customers. This puts us in a prime position to capture opportunities arising from the evolving international trade environment,” Lao remarked.
D&L posted a two percent growth in recurring income to ₱2.3 billion in 2024 while, in the fourth quarter alone, earnings stood at ₱530 million, up five percent year-on-year and seven percent quarter-on-quarter.
Despite the higher operating and interest expenses associated with the Batangas plant, the continued ramp up in operations helped offset the incremental expenses, allowing the plant to book its first full year profit which stood at ₱244 million.
“We are pleased to see our Batangas plant operations yielding promising results. This gives us the confidence that, over time, our industry leading facilities will continue to play an increasingly significant role in boosting our overall net income,” said Lao.
He noted that, “While it is still possible to see quarterly swings in profitability given the early stages of operations—going forward, we expect it to start contributing consistently to our bottom line.
“We believe that we have only just begun to tap into the plant’s potential given the vast opportunities we see in both local and international markets.”
Lao added that, "With earnings in the fourth quarter showing increases both year-over-year and quarter-over-quarter, it appears that momentum is coming back.”
“With strong conviction on the long-term prospects of the business, we continue to buy shares at current levels. Since 2020, the Lao Family, through its holding company Jadel, has acquired another 2.2 percent of D&L’s outstanding shares,” Lao continued.
D&L’s exports continued its positive momentum well into the full year, booking total sales of ₱12.4 billion, which is higher by 37 percent year-on-year. Meanwhile, export gross profits also jumped by 37 percent year-on-year over the same period.
“This is a bright spot amidst a generally cautious consumer sentiment in the domestic market in which sales only grew 16 percent year-on-year while gross profits were down four percent year-on-year,” said Lao.
The export business provides a strategic revenue diversification for D&L. The potential upside can be far greater than the domestic business based on just the sheer size of the addressable market.
In terms of gross profit margins (GPM), the export business also has better margins (18.1 percent versus 14.1 percent for the domestic market) as the company mainly focuses on exporting higher value-added products where it has the competitive advantage in.