In FY23, D&L Industries reported recurring income of P2.3 billion, with earnings per share of P0.32. This is down 31% year on year, due primarily to increased interest and depreciation charges related to the Batangas facility, as well as the lingering effects of high inflation last year. “While 2023 was challenging on several fronts with the incremental expenses from the Batangas plant coming in during a tough economic environment, we are encouraged by the gradual ramping up of operations at this new facility and the early signs of an economic recovery. As of February 2024, our Batangas plant has already reached 175% of our first year export commitment with PEZA.” remarked D&L President & CEO Alvin Lao.
“In hindsight, the decision to start building the plant back in 2018 and continue with the construction during the pandemic allowed us to build capacity that is approximately half the cost of what it would have been post pandemic. With none of our competitors building such capacity over the past couple of years, we are confident that this puts us in a very good position once global demand recovers,” Lao added. “With the stock price remaining attractive, we continue to buy shares in the business. During the past four years alone since the pandemic, the Lao family, through its holding company, Jadel, bought about 3% of the outstanding shares of the company,” Lao concluded. The declaration of commercial operations of the Batangas facility in July 2023 resulted in the realization of depreciation and interest charges that were previously capitalized in the company's income statement. Excluding the impact of these additional expenses, FY23 earnings would have declined by only 15% YoY to P3 billion. Similar to the many facilities that D&L has built over the last 60 years, the commercial operations of a new plant will result in additional expenses that may reduce near-term profits. This is an essential part of establishing a new plant. D&L's management is confident that, while it may take some time, this plant will be extremely beneficial to the company. With the new factory, D&L anticipates additional markets, greater value-added products, and deeper innovations that will push the company's boundaries even further. To date, the new plant has successfully completed multiple orders for both domestic and international customers. Several audit and certification processes are now underway in order to onboard more consumers. Natura Aeropack Corporation (NAC) and D&L Premium Foods Corp. (DLPF), D&L's wholly-owned companies that operate the Batangas facility, have both exceeded their PEZA first-year export commitment as of February 2024. Combined, the two subsidiaries have fulfilled 175% of their export pledge to date. With its cutting-edge manufacturing facility in Batangas, D&L is driving a paradigm shift in its approach to sustainability. With the increased capabilities that the Batangas plant will bring, D&L hopes to provide customers with turnkey solutions that are both economically and environmentally friendly. D&L is preparing to launch a full line of shelf-ready coconut oil products for its export customers in the categories of personal and baby care, cosmetics and beauty care, household cleaning, health and nutrition, and food and vegetable oils that are sustainable, natural, and organic. This program provides a plug-and-play solution for worldwide brand owners wishing to expand their sustainable product options. Under this strategy, D&L will largely target export consumers who are not close to the source and must typically go through numerous levels of production before their products reach their final form and are ready for end-user purchase or consumption. 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.
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