D&L Industries Inc. expects its Batangas manufacturing plant to remain a key driver of growth as the company expands its export business, where margins are significantly higher than in its domestic operations.
The Batangas facility has already been profitable for seven consecutive quarters, D&L President and CEO Alvin Lao said, beating the company's initial expectation that it would take about two years.
“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.”
D&L said the facility, which began commercial operations in 2023 after construction started in 2018, was envisioned as a platform for expanding the higher-value food ingredients, oleochemicals and consumer products business.
Lao said the main challenge for the Batangas plant had now shifted from establishing operations to navigating a difficult export environment marked by tariffs and other protectionist measures in several markets.
Despite this, D&L sees opportunities for its specialized and customized products, which Lao said were less vulnerable to 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,” he said.
Lao said exports were currently generating margins in the high teens, compared with about 12 percent for the company's domestic business.
“So it also means that as we increase our exports, just based on the law of averages, our average margin will go up,” he said.
D&L has set a medium-term goal of exports accounting for 50 percent of its total revenues, with the Batangas plant identified as a major platform for reaching that target.
Lao said they were now focused on expanding their 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.”
He said much of the capital-intensive work for export expansion had already been completed through the construction and commissioning of the Batangas facility.
“The heavy lifting has already been done,” Lao said, noting that while additional investments may still be needed as customer requirements evolve, these would be considerably smaller than the spending required to establish the facility.
The company's export push comes as its earnings have started to recover. D&L reported first-half 2026 net income of P1.5 billion, up 8 percent year on year, while second-quarter earnings increased 10 percent to P786 million. Its high-margin specialty products accounted for 51 percent of sales in the first half.
Meanwhile, Lao said lower coconut oil prices helped reduce costs and working capital requirements. Coconut oil is a major raw material for D&L, particularly for its food ingredients and biodiesel businesses.
He said coconut oil prices, which peaked at about $3,000 per metric ton in August last year, have fallen to around $1,900 per MT, or below $2,000.
“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,” he said.
Lao also said the company saw significant growth potential in oleochemicals, which use coconut oil in applications for food, manufacturing, engineering, industrial and consumer products.
For the biodiesel market, Lao said the mandated blend remains at B3, or 3 percent, while previously planned increases to B4 and B5 have been deferred.
Lao said a higher biodiesel blend could benefit the industry through lower fuel imports, reduced pollution and potentially better mileage, while also supporting demand for locally produced coconut oil.
D&L shares closed up 0.56 percent at P3.56 each on Friday.
