D&L Industries Inc. expects to surpass last year’s P2.3-billion net income despite flat earnings in the January to September period as it anticipates better consumer demand in the fourth quarter.
In a stock exchange filing on Wednesday, the Lao family-led food ingredients and oleochemicals producer said higher expenses nagged on its nine-month profit, which was flat at P1.8 billion.
“The fourth quarter should be better, especially for the food segment because it’s the [Christmas season] … so we should see 2024 better than last year,” D&L president and CEO Alvin Lao said during a press briefing, adding that they historically had higher demand from September to December.
READ: D&L earnings get 6% lift in H1 to P1.3B
This also means that D&L is P520 million away from 2023’s full-year earnings. In the third quarter, the company booked a net income of P492 million.
However, overall growth was tempered by the Batangas plant’s P137-million net loss in the July to September period.
“What we are seeing now is the natural cycle of operating a new plant,” Lao said. “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.”
Year-to-date, D&L said the facility was nearly at break even, with losses during the period at P3 million.
D&L’s top line reached P29.48 billion, up by 19 percent, driven by robust export sales, whose growth exceeded the domestic market.
Exports accounted for P9.2 billion in sales, representing a 38-percent uptick on strength in the food segment.
Domestic sales, meanwhile, reached P20.3 billion, up by more than a tenth.
Currently, exports account for around 30 percent of the total revenues of D&L, whose overseas markets buy food ingredients, specialty plastics and oleochemicals.
According to Lao, they see exports contributing to half of the company’s revenues within five years.
Broken down, the food segment’s total volumes grew by 38 percent. Earnings for the period inched up by 4 percent, a modest growth due to incremental costs in the Batangas plant.
Chemical manufacturing unit Chemrez Technologies Inc., meanwhile, saw its earnings rise by 11 percent, buoyed by the Department of Energy’s recent mandate to increase the biodiesel blend in all diesel fuel sold across the country.
Earnings at the specialty plastics division surged by 32 percent, overtaking both Chemrez and the food division in terms of net income contribution, D&L said. It has yet to disclose its full financial report.