D&L defers commercial operations of new plant

MANILA, Philippines — D&L Industries, the listed chemical and food ingredients manufacturer, has moved the start of commercial operations of its new Batangas manufacturing plant to mid-2023.

This is due to delays in processing permits and certifications and the late arrival of shipments from various overseas suppliers affected by the global supply chain disruptions.

Initially, D&L was targeting to commence partial operations in May next year or earlier.

D&L’s new Batangas plant is located on a 26-hectare property in First Industrial Township – Special Economic Zone in Batangas.

The ongoing expansion, also referred to as phase 1, will occupy about 16 hectares.

As of end-October, the company had already spent about P8.6 billion for the project with P1.6 billion in remaining capex for this year and 2023.

The Philippine Economic Zone Authority (PEZA) has granted D&L an extension until the end of 2023, providing allowances in case of a force majeure.

But D&L’s management is committed to start commercial operations by mid-2023, said company president and CEO Alvin Lao.

“As mentioned during our third quarter briefing, while the plant is substantially complete, some steps in the final stages are currently taking longer than expected. Nonetheless, the bulk of the work has been done and we are past the hardest part, which was continuing with the construction during the COVID-19 lockdown,” Lao said.

He said the plant comes at an opportune time given the strong demand for high value coconut-based products in the export market.

“With the limited manufacturing assets built over the past few years, as hampered by the pandemic, our Batangas plant puts us in a good position. In addition, as the construction contract was already signed and major equipment were already procured prior to the pandemic, we were able to avoid the rapid increase in overall prices, as well as the steep peso depreciation,” he also said.

Despite the delay in commercial operations, Lao said this is not expected to have any material impact on current operations.

Lao noted that D&L’s existing capacity is still sufficient to serve requirements in the near term.

Once completed, D&L’s plant will be instrumental to the company’s future growth, in line with plans to develop more high value-added coconut-based products and penetrate new international markets.

It will mainly cater to D&L’s growing export business in the food and oleochemicals segment.

With the expansion, D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products.

From January to September, D&L’s earnings already beat pre-pandemic levels, rising by 17 percent to P2.5 billion.

The better-than-expected earnings were mainly driven by a wider economic reopening and exports seeing resilient growth, Lao said.