D&L first-half 2026 profit rises 8% as key food ingredients business rebounds

Insider Spotlight

• The key food ingredients business has likely turned the corner, with management saying easing coconut oil prices and a better product mix should support a more durable recovery.
• Higher-margin specialty products now account for the majority of sales, strengthening D&L’s earnings quality beyond the current commodity cycle.
• Management is looking beyond the recovery, saying weaker market valuations are creating acquisition opportunities while the Lao family continues buying D&L shares.

D&L Industries, the country’s largest specialty food ingredients and chemicals manufacturer, said first-half profit rose 8 percent as its key food ingredients business rebounded.

Net income climbed to P1.5 billion in the first six months, while second-quarter profit increased 10 percent to P786 million.

The recovery was driven by improving margins in D&L’s higher-margin specialty products, which accounted for 51 percent of first-half sales as easing coconut oil prices and a richer product mix lifted profitability.

Alvin Lao 

D&L president, CEO 

“The food ingredients business delivered a significant turnaround in 2Q26, which we believe signals that earnings have likely bottomed and reached an inflection point,” president and CEO Alvin Lao said on Wednesday. 

“As raw material costs stabilize and our portfolio optimization initiatives continue to gain traction, we are optimistic about the segment’s ability to deliver more stable and improved profitability moving forward,” he added.

Higher-margin mix strengthens

• Higher-margin specialty products now account for 51 percent of sales, helping lift gross margins by 2.1 percentage points as D&L continues shifting away from lower-margin commodity products.
• With the Batangas plant largely completed, free cash flow turned positive at P2.3 billion as capital spending normalized and coconut oil prices stabilized.
• Improving cash generation strengthened the balance sheet, cutting net gearing to 91 percent while lifting return on equity to 13.2 percent and return on invested capital to 10.7 percent.

Growth broadens

The food ingredients business remained below last year’s earnings but recovered sharply from the first quarter. Meanwhile, specialty plastics lifted earnings 24 percent, while consumer products ODM grew earnings 27 percent as the Batangas plant continued to ramp up and export sales expanded.

“Overall, we remain confident in the long-term prospects of the business. While prevailing macroeconomic uncertainties continue to weigh on market valuations and liquidity, they have also created opportunities to acquire high-quality businesses at attractive valuations,” Lao said. 

He also noted that Jadel Holdings, the Lao family’s holding company, has increased its stake in D&L by about 4.4 percentage points since the pandemic, including purchases of about 7 million shares so far this year. At current levels, the stock offers a dividend yield of about 6.7 percent, based on dividends declared this year.

—Edited by Miguel R. Camus