Further relaxation of limitations raises profits for chemical and food manufacturers.
With the relaxation of the coronavirus disease 2019 (Covid-19) limitations and the continuous rollout of vaccination, food, and chemical goods company D&L Industries is on target to reach pre-pandemic earnings levels this year.
“…We are currently at Alert Level 2, and I heard that in a few weeks, we could be at Alert Level 1, which would mean even more economic activity, which would be very beneficial to us.” And now that it’s Christmas, we’re expecting pre-election spending, so we could end up with a very robust fourth quarter, possibly even outperforming the third. In a virtual news meeting on Wednesday, president and chief executive officer Alvin Lao said, “It is conceivable.”
While new Covid-19 versions continue to emerge, adding to the uncertainty about economic reopening, Lao said the business remains hopeful about these catalysts’ ability to help with near-to-medium-term recovery.
Pent-up demand, according to the business, is expected to contribute to stronger spending during the busy holiday season, assuming that movement restrictions are eased further.
The country is making progress on the vaccination front, which is the true key to an economic revival, with about 30,108,097 Filipinos now fully inoculated against the terrible virus.
“We are on track to beat our net income projections for 2019.” However, when compared to 2018 net income, which was greater than 2019, we are only at 68 percent of 2018 net income, so this year we are unlikely to match 2018, but we do appear to be higher than 2019,” Lao remarked.
He said that they expect to reach the 2018 net income level by next year, based on further relaxing of movement restrictions, continuous vaccination rollout, increased public spending due to the national elections, and the company’s Batangas factory coming online in 2022.
D&L Industries increased their net income by 34% to PHP768 million in the third quarter of this year, compared to PHP573 million in the same quarter of 2020.
This takes the total net income for the first nine months of the year to PHP2.163 billion, or 83 percent of the total net income for 2019.
Lower corporate taxes, as a result of the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law, had a 4-percent influence on Lao’s nine-month net income, according to the company.
President Rodrigo Duterte signed Republic Act (RA) 11534, or the CREATE Act, into law on March 26. The CREATE Act intends to attract additional investments while maintaining fiscal prudence and stability by reforming the business tax and incentive structure.
RA 11534 reduces the corporate income tax rate from 30 percent to 25 percent. This goes into effect on July 1, 2020.