Chemical manufacturer D&L Industries Inc. expects 2024 to remain challenging, but it is optimistic that the business environment will become better as interest rates and the prices of raw materials are expected to stabilize.
“Next year, even if the conditions are similar to what we are seeing now, I don’t think interest rates will go up even more,” said company president and CEO Alvin D. Lao.
He said the pace of the increase in the prices of raw materials and labor may not be as fast as compared to what firms experienced this year.
“This year, we were hit not just with the higher interest rates; we were also hit by higher costs. A lot of raw material prices moved up. And then there were a lot of increases in minimum wage, labor. Another factor was for us were the (expenses for the) new plant, equipment.
“So, next year, it will still be challenging, but my assumptions are (rates and costs are) going to be the same level as this year,” Lao said.
He said one of the possible challenges next year is the impact of the expected El Niño phenomenon on the cost of raw materials, such as coconut oil and they are closely monitoring it.
He said, however, that the impact may be limited since D&L has existing agreements to pass on any changes in the cost of raw materials to its customers so its prices move in tandem with commodity prices.
D&L is also expecting to see more business activity in the next few months as more production lines in its new Batangas plant will be completed.
“A lot of our customers need to certify the new plant. A lot of them want to come down physically to walk around in the loop to make sure everything is moving. So, it really takes time,” Lao said.
He said even the existing customers of the firm that procure products from its old facilities would need to recertify D&L because of the new plant.
The company’s new Batangas plant is more than double the capacity of all of the firm’s existing facilities combined.
“It’s really setting us up for growth, not just the next year or two, but for a much longer timeframe. It’s a good foundation for us to really add a lot more volume and business,” Lao said.