D&L INDUSTRIES, Inc. is reducing its capital expenditure (capex) budget this year amid the scheduled completion of its new manufacturing plant in Tanauan, Batangas; its top official said.
“We are anticipating lower amount spent on capex going forward… It’s just the expansion plan in Batangas, mostly,” D&L President and Chief Executive Office Alvin D. Lao said during a media briefing.
For the year, the company is allocating P1.6 billion in capex, 54.3% lower than the P3.5 billion the prior year, as it nears the completion of its new plant, which is set to begin operations by mid-2023.
“We are still spending and finalizing the construction [of the plant] but it is much smaller,” Mr. Lao added.
In the first quarter, the company reported a 24% decline in net income to P594 million from P780 million the prior year when its customers beefed up inventories amid supply chain issues.
“The last two years when there were a lot of supply chain problems, companies were very concerned that they may lose inventory. So, they would order more than normal just to make sure they have enough inventory,” he said.
D&L Industries’ sales for the three months decreased by 16% to P8.41 billion from about P10 billion in the previous year. Its gross profits for the period increased by 4% to P1.39 billion from P1.34 billion due to the bigger share of its high-margin products. High-margin specialty products contributed 64% to total revenues.
D&L’s consumer product original design manufacturer segment saw a 76% increase in income driven by continued economic re-openings and the resumption of face-to-face activities.
Food ingredients booked a 14% increase during the quarter due to better margins as raw material prices continued to normalize.
The income of its Chemrez segment declined by 41%, while earnings from its specialty plastics business declined by 36%.
“While the first two months of the year were weaker-than-expected, we anticipate things to be much better moving forward as we started seeing volumes coming back in March,” Mr. Lao said in a statement.
“This year, we are confident that the resilience and the ability to adapt to changing business landscape built over the years will allow us to continue to thrive despite various macroeconomic challenges,” he added.
D&L shares fell by 3.5% or 29 centavos to P7.99 per share on Friday. — A. H. Halili