Third-quarter earnings, however, fell to P493 million, down 11 percent from the previous year, largely due to higher costs from newly commissioned production lines at its Batangas plant.
Despite these added expenses, the Batangas facility is approaching break-even on a year-to-date basis.
Management’s view
“What we are seeing now is the natural cycle of operating a new plant. As we further ramp up operations, cost base will increase but this should be offset by the new business that we expect to come in,” D&L president and CEO Alvin Lao said in a statement on Wednesday.
“Strong export sales continue to drive overall business amidst the generally cautious consumer sentiment in the domestic market. So far this year, export is outpacing domestic performance," he added.
D&L bullish on exports
Exports have emerged as a key growth area, with export sales climbing 38 percent year-on-year to P9.2 billion and gross profits rising 24 percent over the same period.
Domestic sales, in contrast, grew by 12 percent year-on-year, while gross profits increased by just 5 percent, reflecting cautious consumer sentiment impacted by past inflation.
“At current export growth levels, we believe we are still barely scratching the surface. We expect exports to continue to increase its relevance to the overall business,” Lao said.
“From this perspective, our Batangas plant becomes more strategic as it allows us to go after exports more aggressively. We believe the near-term cost drag coming from the new plant masks its long-term potential. What we are witnessing is the very early stages of a long-term structural growth story of the company,” he added.
