D&L Industries, Inc. will delay the earliest start of commercial operations (SCO) for its Batangas plant to May 2022 after its subsidiary was granted an extension by the Philippine Economic Zone Authority (PEZA).
“Our existing capacity is still sufficient to serve requirements in the near term, as such the extension in the SCO should have no material impact on current operations,” D&L President and Chief Executive Officer Alvin D. Lao said in a statement on Thursday.
Wholly owned unit D&L Premium Foods Corp. (DLPF) will be manufacturing various food ingredients for the company’s export business. DLPF was originally scheduled to begin its commercial operations by October this year.
PEZA granted DLPF an SCO extension to January 2023, following challenges brought by the recent surge in coronavirus disease 2019 (COVID-19) infections and the reimposition of stringent lockdown measures and shipping delays for the plant’s equipment.
However, another D&L wholly owned subsidiary Natura Aeropack Corp. (NAC) will start commercial operations in May next year as scheduled. It will be the first plant to operate within the company’s Batangas plant. NAC will be manufacturing coconut oleochemicals for different consumer care products.
D&L said it remains “committed” to its Batangas expansion project. The plant is situated on a 26-hectare property in its First Industrial Township – Special Economic Zone, half of which is covered by the ongoing expansion called Phase 1.
“We see ever-growing opportunities in relevant industries in the new normal that we can tap into with this new plant,” Mr. Lao said.
The plant will be dedicated to D&L’s growing export business in the food and oleochemicals segment. It will give the company capability to manufacture downstream packaging, which will also allow D&L to “pack at source.”
“This means that D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products,” the company said.
D&L has spent around P4.5 billion so far for the project and has some P3.5 billion earmarked in remaining capital expenditures for this year and the next. In June, it filed a registration statement with the Securities and Exchange Commission for its maiden P5-billion fixed-rate bond offering to further fund the expansion project.
The company said it is in a “far better position to thrive in an adverse environment and a potentially protracted economic recovery period,” noting strong demand.
D&L recorded a 35% recurring net income growth year on year in the first quarter to P695 million, while its total net income grew 41% to P724 million. D&L believes it can reach its 2019 income levels should it maintain this momentum in the succeeding quarters.
On Thursday, shares of D&L at the stock exchange declined by 2.10% or 17 centavos to close at P7.92 each. — Keren Concepcion G. Valmonte