MANILA, Philippines — The Lao family-led D&L Industries Inc. is banking on easing debt costs and higher earnings from its new manufacturing plant in Batangas as it aims to grow 2024 profits by at least 10 percent.
D&L, the country’s biggest manufacturer of food ingredients and other oleochemicals, saw net income drop 31 percent to P2.3 billion the past year.
Earnings were weighed down by higher startup expenses at its P10 billion manufacturing facility and surging interest rates.
Total sales last year also shed 23 percent to P33.50 billion while gross profit margin improved to 17.1 percent from 13.9 percent in 2022.
“We’re quite convinced for 2024 we will hit at least a low double-digit increase in net income, a minimum 10 percent increase in net income,” D&L president and CEO Alvin Lao told reporters during a media briefing on Thursday.
Higher margin products
The conviction partly stems from robust growth across its business lines and a marked shift toward higher margin products, which took a hit during the COVID-19 pandemic.
Beyond the 2023 results, D&L reported that export revenue at its Batangas plant exceeded its commitment to the state-run Philippine Economic Zone Authority by 175 percent.
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Lao said activity at the plant continues to ramp up, supported by new and regular clients seeking to expand.
“In essence, it’s still the same client base, the scale and magnitude of deliveries is different because the capacity here is just much bigger,” Lao explained.
Meanwhile, debt costs will ease give projected interest rate cuts by the Bangko Sentral ng Pilipinas in the latter part of the year.
Lao said D&L still faces risks but these were mostly external in nature. He cited the potential of escalating conflict in the Israel-Gaza war and a possible Trump victory in the upcoming elections in the United States.
READ: D&L’s 9-month profit down 29%
“It looks highly likely there will be a new [US] president so that could have impact on what’s happening globally, especially in trade,” Lao said.
Hike in biodiesel blend
The company also anticipates further upside in margins as a result of a Department of Energy draft circular on raising the mandated increased in biodiesel blend by 50 percent to 3 percent blend in July.
D&L’s subsidiary, Chemrez, is the country’s largest biodiesel manufacturer in the Philippines.
“A potential increase in blend to three percent (3 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. There are about 14 biodiesel manufacturers in the country,” the company said in a statement on Thursday.