D&L Industries, a manufacturer of food ingredients, plastics, and oleochemicals, targets its net profit to return to double-digit growth in 2020, as it ramps up its expansion project in Batangas to boost capacity and grow its export business.
In a press briefing, D&L President Alvin Lao said the achievement of double-digit growth next year depends on the absence of trade problem between the United States and China, and the recovery of its specialty plastics business segment.
The company attributed the decline in earnings of its specialty plastics in the first nine months of the year to uncertainties in the global trade market due to the lingering effects of the trade war, and the slowdown in the global automotive industry.
But Lao noted its food ingredients, aerosols, and oleochemicals business segments are “getting better”.
“We believe that we are at the bottom of the cycle in terms of net income decline… We’re already seeing signs of our business picking up, especially in the food segment where margins and sales mix are continuing to improve,” he said.
Lao said their domestic business is seen to start recovering in the fourth quarter although exports may not bounce back as fast.
His optimism is based on the continued easing in inflation, lower interest rates and reserve ratio requirements, ramp-up in government spending, and the reduction in port congestion.
“Overall, the company continues to believe that its long-term growth story remains intact and its prospects remain stable. The expansion plan in Batangas is on schedule to be completed and operational in 2021… The upcoming facilities will add the capability to manufacture downstream packaging and will allow the company to capture a bigger part of the production chain,” the firm said in a statement.
D&L reported its recurring income reached PHP2.03 billion in the first nine months of 2019, 15 percent lower than PHP2.40 billion in the same period last year.
In the third quarter alone, net income fell 29 percent to PHP617 million from PHP874 million.
Sales dropped 18 percent to PHP16.56 billion in the first nine months of 2019 from PHP20.17 billion last year. (PNA)