D&L’s 9-month profit down 29%
MANILA -The Lao family’s food and plastics manufacturing giant D&L Industries Inc. said cost pressures and challenging business conditions were a drag on earnings during the first nine months of year even as it doubles down on efforts to seize opportunities in exports, which was identified as a major driver of growth.
From January to September this year, D&L saw profits drop by 29 percent to P1.8 billion, which include incremental expenses related to its newly-opened Batangas manufacturing facility. Sales during the period also declined by 27 percent.
Lao said the “big focus” was driving up exports for products that use coconut oil and its derivatives given the added capacity that was now available with the opening of their new plant.
“We are increasing our efforts for exports,” he told reporters during a media briefing on Wednesday. “That’s becoming our big focus for future growth.”
Lao said a potential government measure to increase the biodiesel blend from 2 percent to 3 percent will also benefit the company because it is a major biodiesel player via subsidiary Chemrez.
“A potential increase in blend to three percent, all else being equal, in theory should lead to a 50 percent increase in biodiesel volumes which may also result in better margins and profitability for the industry,” D&L said.
Meanwhile, the Lao family holding firm Jadel Holdings has stepped in to support the company’s share price, however, there were no current plans to implement a share buyback program.
“D&L, as of now, does not have a hug amount of excess cash and then we have two bonds maturing in the next couple of years so it’s not likely D&L will start a buyback program [and] it will likely still be the family doing the buying for now,” he told reporters.