D&L Industries banks on easing inflation, higher biodiesel blend for 2025 growth

Food ingredients and industrial chemicals manufacturing giant D&L Industries Inc. is expecting better macroeconomic conditions, particularly easing inflation, and the scheduled increase in biodiesel blend to boost its business this year.

D&L president and CEO Alvin Lao said that a much lower inflation is “making us more optimistic that this yeaar… costs will be much lower.”

“There’s more breathing room now for consumers, so hopefully it means more money to spend… and if the economy is doing well, then it should have a positive impact on our company,” Lao said.

Inflation rate clocked in at 2.9% in December 2024, bringing the country's annual average inflation rate last year to 3.2%, which is well within the government's target range of 2 to 4%.

Lao said that on the back of easing inflation and interest rates, D&L is seeing a much better growth prospect for 2025.

“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.

The D&L chief said that the company’s profitability was challenged in the last two years because of high inflation, which was hurting consumer spending.

In the January to September 2024 period, the food ingredients and chemicals producer posted flat earnings at P1.8 billion due to higher expenses.

Nevertheless, Lao is expecting that D&L will exceed its P2.3-billion net income posted in 2023, banking on higher demand during the last quarter of 2024.

The company is also positive on the scheduled further increase in biodiesel blend to be implemented this year.

In May 2024, the Department of Energy (DOE) issued a circular which mandated the increase in coco methyl ester (CME) blend to 3% from 2% in diesel fuels sold nationwide beginning October last year.

The government intends to increase the mandated CME blend to 4% this year and to 5% by 2026.

Lao said that for D&L’s biodiesel business  the “demand is quite strong” as its plants are now operating at a higher capacity because of the increase in the mandated blend from 2% to 3% last October.

“From 40% capacity, we assumed we would be up by 20% to 60%. 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% to make up for the other manufacturers who could not ramp up their capacity,” he said.

With the scheduled increase in blend to 4% by October, Lao said D&L is expecting orders from oil companies to start increasing around two months before implementation so sales should start increasing in the third quarter. — RSJ, GMA Integrated News