LISTED oleochemicals and specialty food ingredients manufacturer D&L Industries, Inc. is projecting a better 2024 amid more stable interest rates and lower raw material costs despite possible challenges such as the El Niño phenomenon.
“For next year, even though the conditions are similar to where we are now, the increase in rates is not as bad anymore because we’re starting at a higher level. So for next year, I don’t think there’s a chance that interest rates will go up even more,” D&L Industries President and Chief Executive Officer Alvin D. Lao said during a recent media briefing
“So from that perspective, next year would be better than this year,” he added.
Mr. Lao said that D&L Industries has faced various challenges this year such as higher interest rates, costs, labor, and prices of raw materials.
However, he projected that the challenges in 2024 would not be as difficult for the company.
“This year, we were hit not just with the higher interest rates, we were also hit by higher costs. A lot of raw material prices were moving up. And then there were a lot of increases in minimum wage [and] labor. And then for us, another factor was [expenses for the] new plant and equipment,” Mr. Lao said.
“So, next year, it will still be challenging, but the assumptions are [rates and costs are] not going to be the same level as this year,” he added.
Mr. Lao said another possible challenge that D&L Industries is “closely monitoring” is the impact of the expected El Niño phenomenon on the company’s cost of raw materials such as coconut oil.
Meanwhile, Mr. Lao said that D&L Industries is expected to receive a boost from its new manufacturing plant in Batangas, adding that the plant serves as a good foundation for more volume and business.
“I think in a few months, we will start to see more activity from the new plant. A lot of our customers are doing certification and auditing. A lot of them want to come down physically to walk around, take a look, to make sure everything is moving. So, it really just takes time,” Mr. Lao said.
“Even if it’s an existing export customer that we’re servicing with our old facilities, if it is a new plant, they need to re-certify,” he added.
Mr. Lao previously said that D&L Industries is also set to get a substantial boost on its margins with the government’s plan to hike the country’s coco biodiesel blend to 3% from the current 2%.
D&L Industries is engaged in the domestic biodiesel industry through its subsidiary Chemrez Technologies, Inc., which operates a biodiesel plant.
“The increase [in biodiesel blend] would mean the demand would go up automatically by 50% from 2% to 3%. The effect on volume and margin, we expect that it will be substantial,” Mr. Lao said.
Shares of D&L Industries were last traded on Dec. 7 at P6.37 apiece. — Revin Mikhael D. Ochave