Food ingredients and plastics manufacturer D&L Industries Inc. is cautiously optimistic for 2024 as overall economic conditions may improve amid easing raw material prices and stable interest rates.
D&L president and chief executive officer Alvin Lao said raw material and labor costs may not go up as much next year compared to the hikes in 2023 while interest rates are expected to remain stable amid easing inflation rate.
“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, labor,” said Lao.
“And then for us, another factor was (expenses for the) new plant, equipment. “So, next year, it will still be challenging, but of my assumptions are (rates and costs are) going to be the same level as this year,” he said.
The company also expects more business to come in the next few months as its newly opened Batangas expansion facility takes in more orders from existing and new clients.
D&L’s Batangas plant will more than double the capacity of all of the firm’s existing facilities combined.
“The Batangas plant is really setting us up for growth over, not just the next year or two, but for a much longer timeframe. It’s a good foundation for us to really add a lot more volume and business,” he said.
Lao said D&L has existing agreements to pass on any changes in the cost of raw materials to its customers so its prices go up or down in tandem with commodity prices even as the El Niño phenomenon may have an impact on the cost of raw materials such as coconut oil.
Lao said the company will also benefit from the government’s plan to increase in the biodiesel blend next year by 50 percent to B3 or 3 percent coco-biodiesel to 97 percent petro-diesel.
The increase in mandated blend will have a large impact on the sales volume as well as margins because of the higher utilization of its biodiesel plant.
D&L’s subsidiary Chemrez Technologies is the country’s biggest producer of quality coco-biodiesel.
