D&L Industries Inc. is more optimistic about its earnings prospects this year amid improving macroeconomic conditions.
The company is the country’s top specialty food ingredients and oleochemicals producer.
D&L president and chief executive Alvin Lao said in a recent interview with reporters the optimism comes from easing inflation, lower interest rates, higher spending due to the mid-term elections and the expected recovery of the tourism and hospitality sectors.
“These are tailwinds for the economy and the normal trend in our company. As long as the economy is doing well, then we are a beneficiary,” he said.
Lao also noted that another percentage point increase in the biodiesel blend in October would boost earnings.
Lao said the Philippine economy and D&L’s profitability faced challenges over the last two years due to high inflation, which hurt consumers and affected their spending.
“If you look at how prices went up so much, especially during COVID, everything was very expensive. For consumers, their pockets really got hurt. Rice prices really went up in the last two years,” he said.
Lao said, however, that rice prices peaked a few months ago and began coming down, which is a positive sign on inflation movement.
“So, looking forward, it’s making us more optimistic this year with inflation much lower. There’s more breathing room now for consumers so, hopefully, it means more money to spend and hopefully it also means a better economy,” Lao said.
He said the upcoming mid-term elections should also help boost consumer spending and the domestic economy.
Lao said the company’s biodiesel business is operating at a higher capacity due to the increase in the mandated blend from 2 percent to 3 percent in October 2024.
“From 40 percent capacity, we assumed we would be up by 20 percent to 60 percent. But what we understand is that many other suppliers of biodiesel may have had issues ramping up their own capacity, so we might have gone even above 60 percent to make up for the other manufacturers who could not ramp up their capacity,” he said.
Lao expects orders from oil companies to increase around two months before the implementation of the increase in the biodiesel blend to 4 percent by October 2025.
He said sales should start rising in the third quarter this year.