February 28, 2025 – D&L Industries’ recurring income reached P2.3 billion, or earnings per share of P0.327, in full year 2024 (FY24). This is higher by 2% year-on-year (YoY). In the fourth quarter alone, earnings stood at P530mn, up 5% YoY and 7% quarter-on-quarter (QoQ).
Despite the higher operating and interest expenses associated with the Batangas plant, the continued ramp up in operations helped offset the incremental expenses, allowing the plant to book its first full year profit which stood at P244mn.
“We are pleased to see our Batangas plant operations yielding promising results. This gives us the confidence that, over time, our industry leading facilities will continue to play an increasingly significant role in boosting our overall net income. While it is still possible to see quarterly swings in profitability given the early stages of operations – going forward, we expect it to start contributing consistently to our bottom line. We believe that we have only just begun to tap into the plant’s potential given the vast opportunities we see in both local and international markets,” remarked D&L President & CEO Alvin Lao.
“With earnings in the fourth quarter showing increases both year-over-year and quarter-over-quarter, it appears that momentum is coming back. We see better earnings growth in 2025 underpinned by the continued ramp up in Batangas plant coupled with near-term catalysts such as the boost coming from election-related spending, the further increase in biodiesel blend, and continued economic recovery,” Lao added
“With strong conviction on the long-term prospects of the business, we continue to buy shares at current levels. Since 2020, the Lao Family, through its holding company Jadel, has acquired another 2.2% of D&L’s outstanding shares,” Lao continued.
Batangas plant turned profitable for the full year; ahead of expectations
With steady and consistent ramp up in operations, the new plant in Batangas turned profitable for the full year. This is ahead of the initial schedule of within two years of operations which was based on the performance of the older plants that the company had built over the years.
The new plant booked a net profit of P244 million for the full year, as it swung back to profitability in 4Q24 coming from a loss in 3Q24, which was dragged down by incremental expenses coming from newly installed lines. D&L expects income from the new plant to continue to increase over time as new orders come in.
To date, the new plant has successfully fulfilled several orders for both local and export customers. Several audit and certification processes are ongoing in order to on-board more customers.
Exports continued to drive growth
Exports continued its positive momentum well into the full year booking a total sales of P12.4 billion, which is higher by 37% YoY. Meanwhile, export gross profits also jumped by 37% YoY over the same period. This is a bright spot amidst a generally cautious consumer sentiment in the domestic market in which sales only grew 16% YoY while gross profits were down 4% YoY.
The export business provides a strategic revenue diversification for D&L. The potential upside can be far greater than the domestic business based on just the sheer size of the addressable market. In terms of gross profit margins (GPM), the export business also has better margins (18.1% vs 14.1% for the domestic market) as the company mainly focuses on exporting higher value-added products where it has the competitive advantage in.
Natura Aeropack Corporation (NAC) and D&L Premium Foods Corp (DLPF), the operating companies behind D&L’s Batangas plant, are aggressively pushing high-value added coconut oil-derived ingredients and finished products for the food, personal hygiene, and home care segments in the export market. With the increasing concern on the massive deforestation associated with the use of palm oil and the depletion of non-renewable energy sources and high carbon footprint associated with the extraction and use of petroleum, coconut-derived ingredients offer an excellent natural, organic, and sustainable alternative for many industries and applications.
Impact of potential new tariffs on exports
While a potential new tariff may result in volatility in the near-term, D&L’s pricing structure and its ability to adjust selling prices protects the company from wild swings in forex and commodity prices. Leveraging on its R&D capabilities and value-add to customers, D&L anticipates that it will be able to continue adjusting selling prices in the foreseeable future.
“In our view, the apparent trade tensions between the US and China present opportunities for companies like us to supply to companies who cannot source from either the US or China. Our new plant in Batangas gives us the capacity and capability to cater to bigger export customers. This puts us in a prime position to capture opportunities arising from the evolving international trade environment,” Lao remarked.
D&L’s export sales, which constitute about 30% of total sales, are rooted in products where the company holds a competitive edge. These include highly customized products with significant R&D input, which are not easily replicable, and products leveraging the Philippines’ natural resources, particularly coconut-based products, which benefit from D&L’s strong supply chain.
“The products that we export are generally distinguished by their unique functional and technical properties, making D&L a go-to supplier for many global customers. With an aggressive export strategy and enhanced production capabilities, we maintain our guidance of reaching 50% export sales contribution to total sales over the medium term,” Lao continued.
Near-term catalysts to drive better growth in 2025
While the incremental expenses coming from Batangas plant have weighed on profitability over the past couple of years, the company sees better earnings growth in 2025 underpinned by the following near-term catalysts:
Balance sheet remains robust; capex has started to normalize
The company’s balance sheet remained in a solid position even with the huge capex over the past couple of years. As of end-December 2024 net gearing stood at 84% while interest cover remained at a comfortable level of 4x. Average cost of debt was slightly lower at 6.29% as of end-December 2024 vs 6.42% as of end-September 2024. With the generally dovish stance of the Bangko Sentral ng Pilipinas (BSP), there is room for the average cost of debt to go down in 2025.
From a capex standpoint, the company does not expect any major capex spending in the near-term. As shown on the chart below, capex has started to taper off in 2023 with the completion of the Batangas plant. With lower capex, the company generated positive cash flows of P833 million in FY24.
Segment results
Food Ingredients
The food ingredients division delivered solid volume growth of 33% in FY24. This stellar volume growth drove profitability despite the incremental costs associated with the newly commissioned lines in Batangas. The food ingredients division ended the year with a 16% YoY earnings growth. For 2025, the company sees continued growth especially with the boost coming from election-related spending benefitting the consumer industry in general.
With its global marketing initiatives and active participation in various world trade shows and conferences, the company has had several successes in gaining new export customers to date. As the new plant ramps up operations, coupled with the improving macroeconomic backdrop and an aggressive export thrust, management is optimistic on the long-term growth potential of this segment.
Chemrez
Things have finally started to improve for Chemrez with total volume up 13% YoY. Despite the incremental expenses coming from the Batangas plant, Chemrez managed to book a 7% YoY earnings growth for the period.
Chemrez sees a continued recovery into 2025 given a more favorable regulatory environment for biodiesel. The DOE earlier indicated another 1% blend increase to 4% (B4) by October 1, 2025. On the higher margin specialties and export side, Chemrez continues to expand its footprint globally especially with the new capacity and capabilities that the Batangas plant offers.
Specialty Plastics
The Specialty Plastics division delivered strong results in FY24 with earnings growing by 18% YoY. Total volume for the period was up by 7% YoY while margins were higher by 1.9 ppts YoY. With its strong performance, the plastics division has overtaken both the food ingredients division and Chemrez in terms of net income contribution for the year.
Improvements in the global auto industry translated to higher demand for engineered polymers for auto wire harness application, which the company manufactures under this division. In addition there were successful market share grabs during the period, as the company continues to demonstrate its reliability as a supplier and as it invests in resources to further develop customer relationships.
In the long run, the company anticipates sustained growth in this segment, driven by its groundbreaking research and development efforts, particularly in enhancing the sustainability of plastics.
Consumer Products ODM
Following a strong performance in FY23, the Consumer Products ODM segment faced challenges in FY24, with earnings plummeting 51% YoY due to the lingering effects of high inflation and incremental expenses from the Batangas plant. The weakness in this division largely mirrors the cautiousness in the domestic consumer market, as 93% of the segment’s sales are concentrated locally. Looking ahead, the company anticipates a rebound as inflation eases and incomes gradually align with higher price levels. Additionally, exports are emerging as a fresh growth driver, now accounting for 7% of total sales—up from nearly zero six years ago—with management expecting this share to steadily increase over the long term.
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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 most 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://www.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, action or events.
INVESTOR RELATIONS CONTACT
Crissa Marie U. Bondad
Investor Relations Manager – D&L Industries Inc.
+632 8635 0680
crissabondad@dnl.com.ph / ir@dnl.com.ph