EARNINGS of D&L Industries, Inc. dropped by double digits in the third quarter as it continued taking a hit from government underspending due to the delayed passage of this year’s national budget.

The Lao-led manufacturing firm posted a 29% decline in net income to P617 million during the three-month period as revenues slipped 20% to P5.52 billion.

This brings the company’s net income for the nine months to September 15% lower at P2.03 billion. Total revenues in the nine months also fell 18% to P16.56 billion.

Its four main business segments all saw declines in the first three quarters, led by its plastics and chemicals businesses, which saw an 18% and 16% drop in profits, respectively. Its food ingredients and aerosols business each fell 2% during the period as well.

Exports accounted for 20% of D&L’s revenues in the nine-month period, down from 23% a year ago. The company said it was affected by the trade war and the protectionist stance in some countries which resulted to less volume of products sent abroad.

Despite this, the company believes it is bound for better results heading into 2020 as “it seems the worst is done,” D&L President and Chief Executive Officer Alvin D. Lao said at a briefing in Makati City.

Mr. Lao said the company is encouraged by the improved risk management of the company by focusing on high-margin specialty products, which now contribute 71% of the company’s total sales.

Another thing the company holds on to is the improving economic condition in the country, where inflation, interest rates and the reserve requirement ratio are all going down. The improving condition at the ports, lower crude prices and expected passage of the second tax reform package that may settle several business uncertainties are also factors the company believes will help its performance.

“The company has faced a challenging environment in 2019… However, we look forward to focusing our efforts, harnessing the recent gains in sales mix and high-margin products as a foundation for long-term growth,” Mr. Lao said.

D&L spent P1.66 billion for capital investments in the nine-month period, up from P873 million last year, as it focuses on expansion particularly for its 26-hectare facility in Batangas. The company sees its capital expenditures exceeding P2 billion by the end of the year. — Denise A. Valdez