D&L sees supply risks, says inventory good for 74 days

LISTED specialty food ingredients and oleochemicals manufacturer D&L Industries, Inc. said it is monitoring potential disruptions to raw material supply and costs due to the ongoing conflict in the Middle East, while expressing confidence in managing the risks.

“Looking ahead, 2026 presents a new set of uncertainties, particularly with the ongoing war in the Middle East and its potential impact on crude oil prices, raw material costs, and global supply chains,” D&L President and Chief Executive Officer Alvin D. Lao said during a media briefing on Wednesday.

The company said geopolitical tensions could disrupt oil prices, raw material supply, and global logistics, while also affecting growth and market confidence.

The company added that it sees opportunities to strengthen its position as a reliable supplier of essential goods amid volatility, supported by steady demand.

Mr. Lao said the company has not encountered a full shortage of materials but noted that access costs have increased. He warned that some items could become scarce within a month.

“The price of everything is going up. Actually, that’s not the only problem. Never mind if prices are going up, but it seems access to supply for a lot of products is also affected. And that’s a big worry,” he said.

D&L said it is negotiating with its global supplier network to maintain raw material flows.

It noted that several suppliers have declared force majeure, limiting deliveries to available supply and canceling contracted future shipments.

Despite the risks, Mr. Lao expressed confidence in the company’s ability to manage disruptions, citing its experience during past oil shocks.

“We were able to survive. We’ve learned the lessons. We have put in a lot of measures to (deal with the problems) because we still remember what we did before,” he said.

The company said it has about 74 days’ worth of inventory to support operations, but flagged replenishment as a key concern.

In 2025, D&L reported a 10.6% increase in recurring net income to P2.6 billion, supported by strong performance from its biodiesel, plastics, and consumer businesses.

Fourth-quarter recurring income rose 20% to P640 million.

Full-year earnings growth was driven by 8% volume expansion, despite elevated coconut oil prices, which have nearly tripled over the past two years.

“Coconut oil prices hit all-time highs, but we still grew earnings 10.6%. This came from R&D investments, customized solutions, and long-term partnerships,” Mr. Lao said.

Volumes increased 8% across both high-margin specialty products and commodities. The company said stabilizing margins could support further earnings growth.

Segment performance was mixed. Chemrez Technologies posted a 24% increase in volumes and a 96% rise in net income, supported by global demand for coconut oil-based products and a higher mandated biodiesel blend.

The Specialty Plastics segment recorded 9% earnings growth in 2025, following 32% growth in 2024. Margins reached record levels, supported by new products developed through ongoing research and development.

“The segment remains well-positioned for continued growth, supported by ongoing investments in research and development and the company’s focus on delivering innovative and sustainable plastic solutions aligned with evolving customer needs,” the company said.

The Consumer Products original design manufacturing (ODM) segment posted an 80% increase in earnings, driven by the ramp-up of operations in Batangas. Exports accounted for 16% of total sales, up from negligible levels six years ago.

In contrast, the food ingredients segment saw earnings decline by 61% due to higher commodity costs. While the company typically passes on cost increases to customers, the rapid rise in coconut oil prices led to short-term margin pressure due to a 30- to 45-day lag in price adjustments.

“As coconut oil prices begin to normalize, coupled with pricing adjustments and ongoing portfolio optimization — rationalizing commodity exposure while increasing focus on high-margin specialty products — the company expects a recovery in profitability and margins,” D&L said.

Shares in D&L rose 5.71% on Wednesday to close at P3.70 each. — Alexandria Grace C. Magno