D&L Industries continues Batangas plant expansion

D&L Industries Inc., the country’s top specialty food ingredients and oleochemicals producer, is allotting about P1 billion in capital expenditures (capex) as it undertakes minor expansions at its new Batangas plant in response to market demand for some products.

In a media briefing, D&L President Alvin D. Lao said this is lower than the %u20B11.16 billion spent by the company last year since they have already completed much of the Batangas plant.

“Capex peaked in 2022 (%u20B13.5 billion) and it will continue to be lower. There are some projects that were started at the main phase of construction a couple of years ago that have been completed recently and we still have to release the retention fees.”

“At the same time, we are still making minor expansions, not as big as what we’ve done in the past couple of years, but on a much smaller scale. So there will still be some capex, but expectation is for it to be lower than what we did last year,” he added.

D&L’s Batangas plant is expected to continue ramping up operations this year and increase its contribution to the company’s net income for 2025 as well as be the key to growth in export revenues.

The plant booked a net income of %u20B1244 million in 2024, despite early losses due to startup costs, with earnings for the fourth quarter alone reaching %u20B1248 million.

“In general, the trend should be upwards (of %u20B1248 million), although in some quarters, it might go down to below %u20B1200 million or even %u20B1100 million. But it will be seeing higher lows and higher highs in the succeeding quarters, so it will be definitely higher for the full year and its contribution to the bottom line (of D&L) will also be higher,” Lao said.

Meanwhile, D&L expects its export revenues to continue growing after both sales (%u20B112.4 billion from %u20B19.1 billion) and gross profits rose by 37 percent each in 2024. Exports accounted for 30 percent of the company’s revenues last year.

Lao said they are not worried about new tariffs being imposed by President Donald Trump in the US since “the US is a very small part of our export business. There is a lot of demand for our products (overseas), not just from the US.”

The firm is also expecting arbitrage opportunities arising from potential tariffs as changes in trade policies generate short-term price differences across markets.

For example, commodities subject to tariffs might command higher prices in the regions enforcing them, while unaffected markets could benefit from artificially lower prices, enabling companies to capitalize on the resulting gap.

“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.