D&L Industries net income down 31% in 2023

LISTED oleochemicals and specialty food ingredients manufacturer D&L Industries, Inc. logged a 31% decline in its 2023 net income to P2.3 billion from P3.32 billion in 2022 due to high interest and depreciation expenses associated with the company’s Batangas manufacturing plant as well as inflation.

In a regulatory filing on Thursday, D&L Industries said its 2023 sales fell by 23% to P33.5 billion versus P43.49 billion the previous year.

D&L Industries President and Chief Executive Officer Alvin D. Lao said in a virtual briefing that the revenues of its specialty plastics and consumer products businesses rose by 2% and 20%, respectively.

In contrast, he said that the revenue of the company’s food ingredients fell by 28% while the oleochemicals segment dropped by 22%.

“While 2023 was challenging on several fronts with incremental expenses from the Batangas plant emerging during a tough economic environment, we are encouraged by the gradual ramping up of operations at this new facility and the early signs of economic recovery,” Mr. Lao said.

“As of February 2024, our Batangas plant has already reached 175% of our first year export commitment with the Philippine Economic Zone Authority,” he added.

For 2024, Mr. Lao said that D&L Industries expects to grow its net income by 10% to 15% as the Batangas plant ramps up production.

“On a macro level, there are at least three catalysts on the horizon to look forward to in 2024 — moderating inflation, prospects of lower interest rates, and the planned implementation of a higher biodiesel blend by July,” Mr. Lao said.

“With lower inflation and interest rate prospects, management is more optimistic in 2024. Longer-term, the Batangas plant puts D&L Industries in a very good position to capitalize on global recovery,” he added.

He added that a positive outlook for the company is the growth of its high-margin specialty products (HMSP), driven by the new volume coming out of the Batangas plant.

“While 2023 was challenging, green shoots are starting to emerge with HSMP volume growth positive across the board. In the fourth quarter of 2023 alone, HMSP volume was up 40 percent year on year,” Mr. Lao said.

The company’s manufacturing plant has already fulfilled several orders both for local and export customers. It is undergoing several audit and certification processes to on board more customers.

“D&L Industries’ management has a lot of confidence that even though it may take time, this plant will be a huge benefit for the company. With the new plant, the company sees new markets, higher value added products, and deeper innovations that will further push its boundaries,” Mr. Lao said.