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D&L Industries Inc. expects its Batangas manufacturing plant to remain a central engine of growth as the Philippine specialty producer scales up its export business, where margins significantly outpace those of its domestic operations.
The facility has now turned in seven consecutive quarters of profit, well ahead of management's initial expectations, according to D&L President and CEO Alvin Lao. 'We were not expecting profitability for a couple of years. I think it was like two years where we were not expecting profitability. However, thankfully, in a year, we were able to already see profitability,' Lao said. 'For the last seven quarters, we have experienced profitability at the plant. So, in that sense, we are ahead.'
Construction of the Batangas complex began in 2018 and commercial operations commenced in 2023. The plant was conceived as a platform for expanding D&L's higher-value food ingredients, oleochemicals, and consumer products segments.
Lao noted that the principal challenge at Batangas has now shifted from ramping up operations to navigating a difficult export environment shaped by tariffs and other protectionist measures in several markets. Despite these headwinds, he said D&L sees strong opportunities for its specialized and customized offerings, which are less exposed to commodity-style competition because they are tailored to specific customer requirements.
'Because of the uniqueness and specialized nature of our products, especially if they're customized for the client, these are products that we still believe have a lot of demand from our customers and we will be able to grow from,' Lao explained.
He said export margins are currently running in the high teens, compared with roughly 12 percent for the company's domestic business, meaning the overall margin profile should improve as international sales rise. D&L has set a medium-term goal of exports accounting for 50 percent of total revenues, with the Batangas plant identified as the principal platform for reaching that target.
To build the export pipeline, the company is focused on expanding its customer base by participating in trade shows, visiting potential clients, providing product samples, and conducting trial runs. 'It's really getting our name out and being able to inform our customers or potential customers [of] our capability and the types of products that we can make,' Lao said.
Much of the capital-intensive groundwork for export expansion is already complete following the construction and commissioning of the Batangas facility, he added. 'The heavy lifting has already been done,' Lao said, noting that while additional investments may be required as customer requirements evolve, these would be considerably smaller than the spending needed to build the plant.
The export push comes as D&L's earnings have started to recover. The company reported first-half 2026 net income of P1.5 billion, up 8 percent year on year, while second-quarter earnings rose 10 percent to P786 million. High-margin specialty products contributed 51 percent of sales in the first half.
Lower coconut oil prices have also provided relief. Coconut oil, a key feedstock for D&L's food ingredients and biodiesel businesses, peaked at roughly $3,000 per metric ton in August 2025 and has since fallen to around $1,900 per MT, below the $2,000 mark. 'It's a relief because coconut oil accounts for a lot of our costs, and especially the hit on our working capital; it is not as heavy,' Lao said.
The CEO also flagged significant growth potential in oleochemicals, which use coconut oil as a feedstock for applications in food, manufacturing, engineering, industrial, and consumer products.
On the biodiesel side, Lao said the mandated blend remains at B3, or 3 percent, while previously planned increases to B4 and B5 have been deferred. A higher blend, he argued, would benefit the industry through lower fuel imports, reduced pollution, and potentially better mileage, while also supporting demand for locally produced coconut oil.
Source: The Manila Times