March 3, 2022 – The start of commercial operations (SCO) for D&L Industries’ Natura Aeropack Corporation (NAC) plant in Batangas will be moved to January 2023, following an extension granted by the Board of the Philippine Economic Zone Authority (PEZA).
NAC, a wholly-owned subsidiary of D&L Industries that will manufacture coconut oleochemicals for various consumer care products, was slated for commercial operations by May 2022. However, in consideration of the recent turn of events such as the Omicron-related surge in COVID-19 cases early this year, global port congestion and supply chain disruptions, as well as longer-than-expected processing of registration and licenses, PEZA has granted a SCO extension to January 2023.
As such, NAC and D&L Premium Foods Corp (DLPF), which is another wholly-owned subsidiary of D&L Industries located at its Batangas site, will now start commercial operations concurrently. DLPF will manufacture food ingredients to cater to the company’s growing export business.
“While the pandemic has posed challenges to the completion of our Batangas plant, this expansion is coming at an opportune time given the strong demand for high value coconut-based products in the export market. This is evidenced by the resilient and robust growth in our export sales which grew 55% YoY in the first nine months of 2021. As the world moves beyond this pandemic, this plant will help us cater to emerging, relevant industries where we see opportunities for new growth. Our existing capacity is still sufficient to serve requirements in the near term, as such the extension in the SCO should have no material impact on current operations,” remarked D&L President and CEO Alvin Lao.
D&L’s Batangas expansion sits on a 26-ha property in First Industrial Township – Special Economic Zone in Batangas. The ongoing expansion, also referred to as Phase 1, will occupy roughly half of the property. The company has so far spent about P6.2 billion for the project. Remaining capex to be spent this year stands at about P1.8 billion. In September 2021, the company executed its maiden bond offering, successfully raising P5 billion to help fund the remaining capex for this expansion. The bonds carry a coupon rate of 2.7885% p.a. and 3.5962% p.a. for the 3-year and 5-year bond, respectively, which are among the lowest rates in Philippine corporate bond history.
Once completed, the new plant will be instrumental to the company’s future growth, in line with plans to develop more high value-added coconut-based products and penetrate new international markets. It will mainly cater to D&L’s growing export business in the food and oleochemicals segment. It will add the capability to manufacture downstream packaging, thus allowing the company to capture a bigger part of the production chain. For instance, while the company primarily sells raw materials to customers in bulk, the new plants will allow it to “pack at source”. This means that D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products. This will enable D&L to move a step closer to its customers by providing customized solutions and simplifying their supply chain, which is of high importance given ongoing global logistical challenges.
As of the third quarter last year, D&L’s earnings are already back to pre-pandemic levels with 3Q21 net income surging 25% vs. 3Q19 and 9M21 net income growing by 7% vs. 9M19. Year-on-year, 3Q21 net income grew by +34% to P768 million. With near-term catalysts such as the continued economic reopening and the boost from election spending, the company sees room for further earnings growth.
D&L Industries is a Filipino company engaged in product customization and specialization for the food, chemicals, plastics and consumer products ODM industries. The company’s principal business activities include manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use. Established in 1963, D&L has the largest market share in each of the industries it serves, as well as long-standing customer relationships with the Philippines’ leading consumer and manufacturing companies. It was listed on the Philippine Stock Exchange in December 2012. For more information, please visit https://dnl.com.ph/investors/.
This press release may contain some “forward-looking statements” which are subject to a number of risks and uncertainties that could affect D&L’s business and results of operations. Although D&L believes that expectations reflected in any forward-looking statements are reasonable, D&L does not guarantee future performance, actions or events.
INVESTOR RELATIONS CONTACT
Crissa Marie U. Bondad
Investor Relations Manager – D&L Industries Inc.
+632 8635 0680
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