D&L Industries, Inc.

D&L reported net income up 10.6% year on year for 2025 and up 20% in the fourth quarter versus the prior year quarter. Company volume increased 8% for the year, with high-margin volume up 9%; revenue rose broadly across segments, but management said much of the top-line increase reflected higher commodity prices. High-margin specialty products revenue rose 22% with margins at 18.5% for the year and 20.1% in Q4; commodity revenue rose 64% with margins at 7.5%. Food Ingredients volume rose 4% and revenue 34%; Chemrez saw higher volume, revenue, and net income from the full-year 3% biodiesel blend; Specialty Plastics revenue rose 4%, net income 9%, and margins by 0.6%. CapEx ended at PHP 767 million, free cash flow was negative PHP 1.2 billion, net debt was PHP 21.9 billion, net gearing was 96%, interest cover was 3x, and average cost of debt was roughly 6%. Looking ahead, management did not give earnings guidance, saying prior assumptions were no longer reliable; instead it expects better cash flow if coconut oil and working capital stabilize, and it expects capital spending to remain closer to maintenance levels.

Alvin Lao framed 2025 as a difficult year but emphasized that the business held up better than expected. His tone was cautious but constructive: he highlighted volume growth, improving Q4 margins, lower CapEx, and the possibility of better cash flow in 2026 if coconut oil prices and working capital normalize. Strategically, he stressed D&L’s diversified product mix, asset-light model, and ability to pass through costs, while repeatedly saying the company looks for “silver linings” in disruption.

The financial commentary focused on the effect of coconut oil and the shift in mix. Management said coconut oil prices were up about 62% year on year and still accounted for a large share of raw materials, which pushed inventory and receivables higher and kept free cash flow negative at PHP 1.2 billion. CapEx was lower at PHP 767 million, and management said this is now near a stable level after the Batangas buildout. Debt rose to support working capital, with net debt at PHP 21.9 billion, net gearing at 96%, interest cover at 3x, and average cost of debt around 6%; management also said the family continued share buybacks and had accumulated roughly 9% of the company since the IPO.

Analysts focused on oil-price exposure, biodiesel policy risk, supply chain disruption from the Middle East conflict, Batangas plant performance, and whether margins were more driven by mix or raw materials. Management said commodity pricing is usually passed through, but there can be a 30- to 45-day lag in high-margin products; it also said the bigger risk is supply disruption, not just price, and that if conditions worsen, every segment could be affected through the broader economy. On biodiesel, management said a pullback to a 2% blend would not make sense because biodiesel is now cheaper than regular diesel, and it suggested an increase would make more economic sense, though no change is assumed in forecasts. On Batangas, management said the plant remains profitable but its income has trended lower because production is shifted across plants and Batangas does not produce biodiesel.