Food ingredients and plastics manufacturer D&L Industries Inc. is doubling capital expenditures this year to roughly P3 billion from P1.55 billion in 2019, as its remains on track with the expansion plans despite threats of COVID-19 on the economic growth.
D&L President Alvin Lao said this year’s capital expenditures would mainly be allotted to the ongoing construction of new production facilities in Batangas province.
“As a company, we continue to focus on initiatives that will allow us to grow the business while building resilience. The construction of our next generation expansion facilities, which will be the foundation of our next leg of growth, is on-track and set to be operational by the second half of 2021,” he said.
“We continue to believe in the long-term prospects of the business and we see the current sell-off in the stock as a limited window of opportunity for shareholders who, like us, seek long-term value,” he added.
The Batangas expansion is scheduled for completion by the middle of 2021.
After a weak performance in 2019, Lao said the company was initially expecting overall business to recover this year on the back on stronger macro-economic fundamentals, such as the early passage of the 2020 budget, further interest rate cuts and softer inflation outlook.
Lao, however, said the company had yet to assess the full impact of the COVID-19 on its operations.
On the supply side, Lao said DNL had the advantage over competitors since only about 15 to 20 percent of its imported raw materials came from China.
He said the company also found other suppliers for some of the company’s imported raw materials.
“So some of our customers who have been buying from our competitors have turned to us and we are gaining some market share,” he said.
Lao said the company was still wary of the impact of negative consumer sentiment on consumption.
D&L reported a recurring income of P2.6 billion in 2019, down 18 percent from 2018.
“The company faced a tough year in 2019, brought on by a confluence of external factors,” said Lao.
D&L is a Filipino company engaged in product customization and specialization for the food, chemicals, plastics and aerosol industries.
