D&L Industries, Inc.

D&L reported full-year 2025 net income up 10.6% versus the prior year, and fourth-quarter net income up 20% year on year. Management said company volume increased 8% for the year, with high-margin volume up 9%, and revenue rose sharply in several businesses, including high-margin specialty products up 22%, commodity revenue up 64%, Food Ingredients revenue up 34%, and Chemrez driven by the first full year of the 3% biodiesel blend. Gross margin figures were not given as a company-wide hard number, but management said high-margin specialty product margin was 18.5% for the year and 20.1% in Q4, while commodity margin was 7.5% versus 8.7% previously. On cash flow, free cash flow was negative PHP 1.2 billion, capex was PHP 767 million, net debt was PHP 21.9 billion, net gearing was 96%, interest cover was 3x, and average cost of debt was roughly 6%. Management did not provide earnings guidance, saying budget assumptions were no longer reliable because conditions had changed materially. Instead, it said lower coconut oil prices and lower capex could improve 2026 cash flow if working capital normalizes.

Alvin Lao framed 2025 as a difficult year but emphasized that the company outperformed its own expectations and stayed resilient. He highlighted volume growth across almost all segments, improving quarterly margins, lower capex, and the possibility of stronger cash generation as coconut oil prices cool and working capital eases. His tone was cautiously optimistic, but he repeatedly stressed that external events, especially the war and supply disruptions, could affect all businesses and the broader economy.

No separate CFO spoke, but management gave detailed financial commentary. Lao said raw materials were 84% of costs and expenses, with coconut oil and palm oil together making up 61% of raw materials and coconut oil alone still more than 30% of usage; coconut oil prices were up about 62% year on year and the peso ended at PHP 57.63 versus about PHP 60 currently. He said working capital tied up in inventory and receivables increased by close to PHP 6 billion, inventory days improved to 74 from 107, receivables improved to 45 days, payables were 9 days, and debt rose to support higher working capital needs. He also said net debt was PHP 21.9 billion, net gearing 96%, interest cover 3x, and the average cost of debt roughly 6%, including documentary stamp tax.

Analysts pressed on oil-price exposure, whether biodiesel blend could be rolled back, supply risks, and whether the company would give earnings guidance. Management said it does not forecast net income because prior assumptions on rates, FX, crude, and growth were no longer valid, and it flagged supply disruption as a bigger worry than price alone. On biodiesel, Lao said a reduction from 3% to 2% would not make sense because biodiesel is now cheaper than regular diesel at current pump prices, and he suggested the more likely direction would be a higher blend over time. He also said interest expense is passed through in commodity pricing and that supply challenges in resins are already present.