News

D&L’s export revenues have already overtaken imported costs, provides natural hedge against continued peso weakness

October 21, 2021 – D&L’s export business has continued to show robust growth amidst the pandemic. With exports sales in the first half of the year more than doubling vs pre-pandemic level in 2019 and increasing by 70% vs 2020, the company’s dollar inflow has already overtaken the dollar value of its imported raw materials. As such, from a net importer since practically its inception, the company has now become a net exporter of goods, and is positioned to marginally benefit from a stronger US dollar. As of the first half of the year (1H21), D&L’s export sales accounted for 33% of its total revenues. Meanwhile, imported raw materials accounted for 47% of total raw material costs.

“Our strategic focus on growing our exports business has started to bear fruits. It is something that we take pride in. From a relatively small and unknown manufacturing and R&D company in the Philippines, our export customers are starting to recognize us as a quality, reliable, and world-competitive supplier of various food and chemical raw materials. Looking ahead, especially with the much anticipated commercial operations of our facility in Batangas, we see various opportunities that we can now take advantage of given the new capacity and capabilities that we will have. We see exports accounting for at least 50% of our total revenues in the next few years,” remarked D&L President & CEO Alvin Lao.

The strong export performance and outlook were driven by products where D&L has a competitive advantage in. These are mainly coconut-based products under food and oleochemicals which continue to gain traction in the global market due to coconut oil’s perceived natural antiviral, antibacterial, and antifungal properties. The shift towards more sustainable consumption trends is also benefiting these products, as coconut derivatives serve as non-toxic substitutes for petroleum-based raw materials used in many applications such as personal hygiene and home cleaning products.

While global recovery continues to be threatened by macro risks such as rising energy costs and worldwide supply chain disruptions, D&L sees itself as well-insulated amidst these challenges.

“The essential nature of our businesses, our low fixed cost structure, and our ability to adjust our prices regularly places us in a very solid position to weather emerging risks to recovery. While ocean freight has been historically high, we’re able to grow our exports business given the specialty nature of the products that we export and the strong demand from our customers, making freight costs a secondary consideration. In addition, as a percentage of our total costs and expenses, both our shipping costs and power costs only account for about 1%.

While fresh risks have emerged, we are still optimistic that the Philippine economy has likely bottomed out. We see various catalysts on the horizon that can support recovery in the near to medium-term such as the continued reopening and the anticipated spending boost coming from the Presidential elections and Christmas season. The country’s vaccination rate has also been picking up with approximately 55% and 23% of Metro Manila and of the entire country’s population already fully vaccinated, respectively. Overall, we should still be on-track to reach at least the same level of pre-pandemic income booked in 2019,” Lao concluded.

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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 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 //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