Manufacturers are seeing signs of relief after years of battling inflation, volatile commodity prices, and supply chain disruptions.
|The sharp decline in crude oil and coconut oil prices is easing cost pressures across industries, while strong demand from plastics, packaging, and construction-related manufacturers continues to support growth.
D&L Industries Inc., the country's largest producer of oleochemicals, specialty plastics, and food ingredients, is among those growing more optimistic.
“It's hard to predict, but I think the worst is over with a lower price of crude oil,” D&L President and CEO Alvin D. Lao said during a media briefing following the company's annual stockholders' meeting on Monday. He also cited the lower-than-expected inflation rate in May as a positive signal.
Crude oil prices have fallen from a peak of $120 per barrel to about $95 per barrel, while coconut oil prices have dropped 30 percent from last August's high of $3,000 per ton to around $2,100 per ton.
“So, in that sense, we're comfortable. If we could survive at $3,000 a ton, we're definitely okay at $2,100 a ton,” Lao said.
Coconut oil accounts for about 39 percent of D&L's raw material requirements.
While inflation has dampened demand for food products, the company's non-food business has benefited from strong orders from manufacturers of plastics, packaging, paints, and construction materials.
“Thankfully, we have our non-food side, which was up by a lot, and that growth more than offset the weakness or drop in the food side,” Lao said.
He said many industrial customers have been building inventories amid concerns that tensions in the Middle East could disrupt supply chains. The non-food segment now contributes 46 percent of total revenues.
Lao also said the shift to electric vehicles has had little impact on biodiesel demand, as diesel consumption remains largely driven by public transport and freight vehicles.
Despite lingering uncertainties, Lao said: “Management remains confident in the Company's ability to emerge stronger through each business cycle. At the same time, such disruptions create opportunities to further strengthen the Company's position as a reliable supplier and trusted partner.”
Separately, D&L declared total cash dividends of P0.236 per share, equivalent to a 6.6 percent yield, and named former Shell Philippines chief Cesar G. Romero and former Energy Development Corp. chief Richard Raymond B. Tantoco as new independent directors, citing their extensive leadership experience and strategic expertise.
