D&L sees earnings recovery this year

D&L Industries Inc. expects a recovery in profitability this year after earnings in 2023 fell due to higher interest and depreciation expenses associated with the Batangas plant coupled with the lingering effects of high inflation.

D&L president and CEO Alvin Lao said the company expects its net income this year to grow by the “lowteens” or between 10 and 15 percent.

“We’re quite optimistic about 2024 because the interest rates are likely going to be coming down. Inflation is definitely lower this year. Even the dollar-peso exchange rate is fairly stable,” Lao said.

“Globally, if you look at the movement of commodity prices, the last couple of years it’s been tough. When the Ukraine war started two years ago, the movement in the price of everything went up. We don’t see that kind of volatility in 2024 anymore,” he said.

Given all these factors, Lao said the company is confident it would be able to hit at least a low double-digit increase in net income this year.

“So minimum 10 percent increase in net income. We’re quite optimistic about that,” he said.

In 2023, D&L saw its recurring income decline by 31 percent to P2.3 billion.

The company said the declaration of commercial operations of the Batangas plant in July 2023 prompted the recognition of depreciation expenses as well as interest expenses, which were previously capitalized in the company’s income statement.

Excluding the impact of these incremental expenses, its 2023 earnings would have fallen by just 15 percent to P3 billion.

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

He said D&L’s management has a lot of confidence that even though it may take time, the plant will be a huge benefit for the company.

With the new plant, D&L sees new markets, higher value added products, and deeper innovations that will further push its boundaries.

As of end February, Lao said D&L’s Batangas plant has already reached 175 percent of its first year export commitment with the Philippine Economic Zone Authority.