By James A. Loyola

D&L Industries, Inc., the country’s largest specialty foods ingredients, plastics and oleochemicals firm, is doubling its capital expenditures this year to about ₱3 billion from ₱1.55 billion in 2019 as it remains confident of its long-term prospects.

In a press briefing, D&L President Alvin D. Lao said capex will be spent mainly for the company’s ongoing ₱8-billion expansion in Batangas. “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.

Lao added that, “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.”

D&L is expecting its businesses 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.

However, the firm faces some uncertainties due to the COVID-19 disease.

“We see reasons to be more optimistic this year given 1) early passage of the 2020 government budget and extension of the validity of 2019 budget, 2) expectations of further cuts in interest rates, and 3) abatement of the US-China trade war tensions,” Lao explained.

He noted though that, “we are also cognizant of the fresh risks brought on by the COVID-19 outbreak which may have implications on the global economy that may be hard to quantify at this point.”

On the supply side, Lao said they have the advantage over competitors since they have large inventories on hand and only about 15 to 20 percent of their raw materials come from China and they have already found other suppliers for these.

“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.

However, Lao said they remain wary of possible supply chain disruptions, negative consumer sentiment and port congestion.

D&L reported a recurring income of P2.6 billion for 2019, 18 percent lower than the previous year. Earnings before interest and taxes was lower by 13 percent at P3.5 billion.

“The company faced a tough year in 2019, brought on by a confluence of external factors,” said Lao citing the delayed budget, spillover effect of the 2018 inflation scare and indirect effects of the US-China trade war.

He noted though that there are emerging signs of receovery starting the third quarter of 2019 for their food and aerosols businesses and these are seen to continue in 2020.