D&L Industries Inc. eyes growing its profit by double-digit this year with the full operation of its Batangas plant.
Primarily focused on the company’s export market, the Batangas plant is seen to contribute half of company topline in the next two to three years.
“Over the longer-term, we have a lot of confidence that the new investments that we have made over the past years will pave the way for higher and more sustainable profit growth,” said Alvin Lao, D&L president, at the company’s shareholders meeting.
“To date, our Batangas plant has been instrumental in opening up new markets for us as we aspire to become a truly global Filipino manufacturing company,” Lao added.
In the first quarter, exports recovered sharply with revenues up by 39 percent year-on-year, bringing the export contribution to total sales almost at a record high of 32 percent for the period and this is expected to rise to the mid-to-high 30s by the end of 2024.
“With the new capabilities and capacity that the Batangas plant brings, D&L reasonably expects that it will be able to achieve its goal of having exports account for at least 50 percent of total revenues in the next couple of years,” said Lao.
D&L closed the first quarter with a 4 percent increase in profit to P618 million, driven mainly by the steady and consistent ramp up in operations of the Batangas plant.
Lao said that just a few months after it was commissioned, the plant is almost break even in its results for the first quarter of the year.
With the current run rate, it is possible that the plant may breakeven ahead of the initial schedule of at least two years since the start of commercial operations, Lao said.
As of March, Natura Aeropack Cor. (NAC) and D&L Premium Foods Corp. (DLPF), D&L’s wholly-owned subsidiaries operating the Batangas facility, have both surpassed their first year export commitment with PEZA (Philippine Economic Zone Authority), noted Lao.
Combined, the two subsidiaries have delivered 230 percent of their export commitment to date.
Online stockbroker Colfinancial.com said D&L’s first quarter results helped the consumer sector in the stock market to post a “fragmented” recovery in the first quarter.
Core earnings of consumer companies posted a median growth rate of 3.0 percent, a marked improvement from the 10.2 percent contraction in the fourth quarter last year.
Earnings of manufacturers improved 5.7 percent, mainly due to margin-led recovery and stable demand for staples. Profits of retailers meanwhile and restaurants contracted 21.1 percent and 14.6 percent respectively, as rising expenses persisted alongside softer top-line results.
In the manufacturing sub-sector where D&L is included, topline growth generally improved, posting a median growth rate of 5 percent from 3 percent in the fourth quarter.
“DNL’s revenues improved 5 percent on the back of robust volume growth across nearly all business segments, save for consumer ODM (original design manufacturers),” Colfinancial said.
