D&L sees higher profits this year

MANILA, Philippines — D&L Industries Inc., the country’s leading specialty food ingredients and oleochemicals producer, expects to end the year with higher profits.

D&L president and CEO Alvin Lao said that he is optimistic that a strong fourth quarter would allow the company to surpass this year its 2023 profit of P2.3 billion.

Lao said the company needs to earn P520 million to match last year’s profit after net income reached P1.8 billion from January to September.

“Fourth quarter should be better (than the third quarter), especially for the food segment because it’s the ‘Ber’ months. So we should see 2024 better than last year,” he said.

Lao, however, said that it is still too early to tell how big the jump in the company’s earnings will be from the third quarter to the fourth quarter.

In the third quarter, D&L’s earnings declined by 11 percent year-on-year to P493 million due primarily to higher cost base resulting from newly commissioned lines inside its new Batangas plant.

“What we are seeing now is the natural cycle of operating a new plant. As we further ramp up operations, cost base will increase but this should be offset by the new business that we expect to come in,” Lao said.

According to Lao, strong export sales continue to drive overall business amidst the generally cautious consumer sentiment in the domestic market.

He said that export is outpacing domestic performance so far this year.

Exports sustained its positive momentum during the nine-month period, booking total sales of P9.2 billion, up by 38 percent year-on-year.

Consumer sentiment in the domestic market, meanwhile, remained cautious, as sales grew by only 12 percent year-on-year.

D&L currently has the capability and capacity to supply bigger export customers with the commercial operations of its Batangas plant.

“At current export growth levels, we believe we are still barely scratching the surface. We expect exports to continue to increase its relevance to the overall business. From this perspective, our Batangas plant becomes more strategic as it allows us to go after exports more aggressively,” Lao said.

Lao said D&L could hit its target of exports accounting for 50 percent of revenues in five years.

However, he said that this is not definite since the domestic market is also seen to grow further on the back of easing inflation.