D&L Industries, Inc. ($DNL)

Hi, everyone. Good morning. Welcome to the full year results briefing of D&L Industries. To discuss the results, here wit us today is Mr. Alvin Lao, President and CEO. I now turn over the floor to Alvin.

Hi, everyone. Good morning. Thank you for joining us today for the discussion on the full year results of D&L Industries. So the highlights, we did better than we expected. 2025 was not an easy year. So we managed to have net income increase by 10.6%. And versus the previous year. And very encouraging is, as you see there compared to fourth quarter of the previous year, net income was actually up by 20%. Second bit point, we did see good growth in volume across almost all segments, and we'll go into more details later. Despite the big search in coconut oil prices. So we did see margins also starting to improve. Gross margins in the fourth quarter doing better versus the previous quarter. We also saw our CapEx continuing to trend lower. Even though coconut oil prices peaked last year, they they have started to ease, and it does give us a lot of room to -- with lower working capital to be able to allow us to be able to reduce debts going forward. So bullet point number 5, of course, we are faced with a lot of things going on outside the country, which is affecting everyone. But we are continuing to look for the silver linings as we always do. And essentially, hopefully, these are opportunities for us, to continue to present ourselves as a solid supplier and partner to work with our customers. So here's a look at the change or how our net income has been over the last couple of years. So you can see there, our net income actually peaked in 2022 at around PHP 3.3 billion and comparing 2024 to last year, they received a 10.6% increase. With -- on the right side there, you can see the breakdown. So Chemrez Group being the biggest contributor of net income, followed by specialty plastics, wood coming 1/3 and consumer products ODM in force place. So here's a look at how our Batangas plant has been doing. So it's still profitable. But -- and it is not -- it's not as steady as we hope, but it is still at least keeping its head above water. As we roll out the utilization, we should continue to see improvements in the income from the Batangas plant. Here's a look at the condensed income statement. So there, you can see a very big jump in revenue. But again, just as we have mentioned in previous quarters, a lot of this increase in revenue is tied with higher commodity prices. So a better way to measure our growth, how we're doing is really looking at the volume change. But what we've highlighted there in the green box is really how net income has changed. So year-on-year, up by 11% quarter-on-quarter, up by 15%. And then just fourth quarter year-on-year, up by 20%. So a look at our export sales in the next slide, you can see that our exports did go up, value went up by 16%. But in terms of -- so what's been happening is last year was the first full year of the 3% blend for biodiesel. So that had a very big impact in terms of adding volume to our domestic sales. So it made the growth in exports look smaller. So we actually saw a decrease in exports as a percent of total sales. But it's really more a factor of our domestic business growing much bigger. And so we can see that also here in this slide. So in the previous periods, I remember, I think it was last year and the year before, we would see revenue and net income -- or sorry, gross profits from exports outpacing that for the domestic business. But it wasn't the case for last year. So biodiesel was one factor with this. However, if you take a look at the bottom of the slide, you do see that as far as our profit margins are concerned, the profit margins for exports still do still performed much better than the domestic business, 16.4% versus below 12% for the domestic business. The next slide is our volume, how volume has changed across the different businesses, and then we split it between high margin and commodity. So almost all segments saw increases with the exception of the food commodity segment. So that was down by a little bit down by 2%. Everything else was up. the biggest increase coming from by diesel, which is a 36% increase in volume for Oleochemicals commodities. Overall, for the company, volume increased by 8%. And then overall, high-margin volume was up by 9%. So I would say we did pretty well considering for our Food Ingredients business, the commodity side, that's actually the lowest margin category we have in our business. We will talk about more details with that in the next -- in the upcoming slides. So just looking at high-margin specialty products. So volume for this, as was mentioned in the previous slide, for the year, was up by 9%, although it was down a little bit in the fourth quarter. So comparing fourth quarter 2025 versus fourth quarter 2024 volume was down by 4%. But for the year, it was up by 9%. So the -- even though we did see a slight drop, it was more than offset by the big increases we saw in the first and the third quarters, so that made up for that slightly weaker fourth quarter. Here's a closer look at the high-margin Specialty Products segment. Revenue up by 22%. And on the right side there, you can see Foods, the biggest contributor of revenue for high margins. On the bottom left there, you can see our margins for the last 12 years. And for the year 2025, high-margin specialty products margins were lower compared to the year before, coming in at 18.5%. However, if you take a look at the box in the dotted line there. It's a breakdown of margins across 4 quarters of last year. And you can actually see that there is an improving trend -- the fourth quarter margins came in at 20.1%. So versus third quarter, which was at 17.6%. So it's not -- so there is a bit of a silver lining in the sense that there is that improvement as far as the quarterly margins are concerned. Next is the commodity closer look at the commodity segment revenue up by 64%. For the commodity segment, it's much easier for us much quicker to pass on price changes, so you can see that margins dipped a little from 8.7% to 7.5%, but still more or less in that midpoint between -- so the low for commodity margins would come in at around 4% and the high usually comes in at around 10%. So at 7.5%, we're just at that midpoint where we expect commodity margins to be at. So a look at our revenue mix. So there's that increase in the biodiesel blend. So that started October of 2024. So from 2%, it went up to 3%. We were a big beneficiary of that increase. And that is the biggest reason why we did see commodities as a bigger share of our revenues last year. However, we do expect the trend to approach that, meaning before COVID, it was roughly 2/3, 1/3 blend, meaning 2/3 coming from high margin, 1/3 coming from commodities. Long term, we still expect that direction or trend to be what we will see in the business. The next slide. So a couple of things going on here. In the middle, you see our 2 most used commodity raw materials, coking oil and palm oil. Together, they make up approximately 60 -- roughly 60% of the raw materials that we used as a company. And you can see there on the right, cocoa oil prices year-on-year were still up, we're up by about 6% -- versus palm oil, which is up by just 6%. And cocoa oil prices actually peaked in August last year. So not -- you can kind of tell in the chart. So we hit $3,000 a tonne for coconut oil around August of last year. Currently, we're at roughly 2 -- between 2.3 and 2.4 million versus the low -- so from this chart, you can see that the low is roughly at around $1,000 a couple of years ago. So it has been very volatile period for cocoa oil prices. Below that, of course, is the dollar-peso exchange rate. So we ended the year at 57 63. But of course, we're at the 60 level today. So that has also been affecting our costs. But above that, you see there the change in margins don't so much reflect what's happening in the prices of our raw materials. And it's actually more a closer matter to the change in our product mix that we showed in the earlier slide. So it's really the product mix that's driving our margins much more than the changes in the underlying prices of our raw materials. Next slide, our condensed statement of cash flows. So with coconut oil prices up by 62% and with cocoa oil making up, I think still over -- sorry, over 30% of the raw material we used. That's another big effect on our working capital. So more cash tied up in inventory and receivables even more than last year, up close to PHP 6 billion, as you can see. So -- but you also see that CapEx is lower versus the previous year. But we're still ending the year with negative free cash flow at negative EUR 1.2 million billion. But as I mentioned earlier, coconut oil prices have been trending lower and it doesn't look like it's going to hit the high that we saw last year. So assuming working capital is much steadier this year because of steadier raw material prices, then that should be a very big change in -- not just our working capital, but in our free cash flow as well. for 2026. So this slide, this is our -- how our CapEx has been. So end of 2018, we started construction of our Batangas plant, CapEx peaked in 2022 and since then, has been trending lower. So we ended the year at PHP 767 million in CapEx. So that -- I would say that's pretty close to the stable CapEx level, we would have going forward, meaning not much costs -- not much CapEx anymore tied to the big construction in Batangas. It's really more things like maintenance CapEx and upgrading of a couple of lines, but not as big compared to what we saw in the last couple of years. So this will be another factor, which will contribute to better cash flows for the group as well. So this is jump into more details into each segment. So here, you can see the contribution for each of our 4 major divisions in terms of revenue as well as net income. So in terms of revenue, food is still our biggest followed by Chemrez, third specialty plastics for consumer products, ODM. But in terms of net income contribution, Chemrez was #1, followed by Specialty Plastics. Both at or over PHP 1 billion in net income. -- food ingredients at #3 and Consumer Products ODM. So dive into our Food Ingredients business. So we saw volume up by 4% and revenue up by 34%. However, a lot of changes happening, especially. So first of all, we did see volume growth across all the high-margin segments in food. So -- in the 4 boxes that you see at the bottom, especially fastened oils, specialty ingredients, food safety. These have been our high-margin performers for food. It's only that second box, refined vegetable oils, which is low margin. As you can see, they're coming in at 4.8% gross profit margins. So in terms of revenue coming in at the same level of revenue increase as the overall food segment. at 35%. But you can see there the volumes started to drop. Volume was actually down by 2%. And this is 1 segment that grew a lot during COVID. For those of you who have been following us for the last couple of years, during COVID, we saw a massive jump in our commodity refined vegetable oil segment. because it was really a market share gain. A lot of our competitors were not active in this category. And so it was just an opportunity for us. We had the facilities. We have the access to our suppliers, so we were able to gain market share. However, we are starting to give a lot of that market share back -- so you will -- so we did see volumes drop in this segment last year. You will continue to see volumes drop in this segment. The overall effect on margins and profits is not as big because it is -- the margins in this segment are quite low at below 5%. So you should see overall margins for this segment go up in the next couple of years as we trim that volume or that market share in the commodity segment. For the next slide, so that's Chemrez. And the big driver of change in this segment is really coming from by diesel. So 2025 was the first full year of a 3% plan. We only had 2% -- sorry, -- we only had 2 months of the 3% blend in 2024 because it really started October. But in in 2025, it was a full 12 months of the 3% blend. So there, you can see the big jump in volume, revenue as well as net income. Overall, margins were lower because biodiesel is a lower-margin business compared to the other businesses of Cameras. But still, overall, Chemrez, the the biggest contributor of net income for the group for the year. In terms of more details of the -- just a little bit of history. So the law, the biofuels law passed in 2006, 1% blend started in 2007, went up to 2% in 2009. It was only 15 years later that the blend increased to a further 3%. So that was in October of 2024. We do not know yet when the next increases will happen and our attitude even before, it's something we don't really price in or we count on our projections. It's just a bonus if it does happen. But what we have seen in the past, every time there is an increase in the blend cameras does benefit. So here specialty plastics. So this segment -- it's the steady eddy of our business, doing -- continuing to do well. Even if volume was flat, revenue was up by 4%. Net income was up by 9%. And margins were higher as well by 0.6%. And this is a segment that doesn't really cater much to single-use plastics. It's really the plastic materials that we see replacing more materials that we use in our lives, everything from cars cabling in buildings, appliances and so on. So still a lot of development going on, and we believe still a lot of growth coming going forward. And then fourth, Consumer Products ODM. So this was a business, especially personal care that really suffered during COVID. I remember it was just something that just looked like it fell off a cliff 6 years ago when Cogut started. So it's still continuing to make a comeback. We have also started to see exports in this segment as well. So still a relatively small business, but now I believe it's contributing 8% of net income for the group. So becoming relevant. Next page. So our asset-light model. So on the left side, you can see there -- the group -- if you look at the balance sheet, it doesn't own a lot of fixed assets. So things like property warehouses, barges and so forth. These are not -- D&L doesn't have any of these in the balance sheet. It's all leased from affiliate companies. So that cost usually comes in at between 1% and 2% cost and expenses. And then -- so these are related party expenses. On the right side, you see there D&L as a service company to the group. -- performs a lot of what we call management and shared services. So everything from HR, admin, accounting and finance, legal, IT, and so it charges the sister companies and that charge is really the party income for D&L. So helping to offset the related party expense. Next slide, cost structure. So our biggest cost by far is still raw materials. So for 2025, it was 84% of costs and expenses just coming in from raw materials. Number two, is labor; number three, depreciation and rental. So our fixed costs are pretty much labor depreciation and rental and maybe some of the utilities and maybe half of others. So a little over 10% of our costs classified as fixed, almost our costs classified as variable. This is something which makes us very different from almost every other manufacturing company. It makes us -- in terms of our business model, this is what allows us to survive and be nimble every time there's a crisis. On the right side there, you can see the breakdown of raw materials. So coconut oil at almost 40%, palm oil, 22% together, 61%. And there, the text on the right side, roughly 31% of the raw materials we use are important. So if you do the math, you can kind of figure out that our -- the amount in terms of raw materials we use is almost exactly the same as the dollar amount of our exports. In fact, I believe our exports are already slightly ahead of our importations. So that means on a net basis, we're not a dollar user anymore. We are adequately hedged and over time, as our exports increase, we will likely be a dollar -- a net dollar earner already. Bottom left, you can see there, technology spend, so this R&D as well as -- and this is something that we have seen increasing gradually over time. So we are continuing to invest in R&D and technology. Next slide. So our balance sheet. So we did have to bring on more debt to finance the higher working capital needs. So that was in the cash flow slide that we showed earlier. So debt ratios have gone up. But in terms of book value per share, Return on equity as well as return on invested capital, we have seen increases as well versus the previous year. Next slide shows you capital structure. So -- the yellow bar there is debt, so that has gone up. Net gearing is now at 96%. So still not -- I would say it's not -- we're not heavily geared. Interest cover is Net debt is at $21.9 billion. Average cost of debt at roughly 6%. This includes the cost of documentary stamp tax. And then the next slide. So this is our effective interest rate and net debt as well as interest cover over the last 10 years. Next slide is our working capital cycle. So big improvement from 139 days in 2024, we're down to 110 days, inventory at 74 days, an improvement over the previous year's 107 days. Payables is at 90 days. So this is something we are continuing to work on because it was 21 days the year before. We also saw an improvement in receivables. So 45 days now for our AR days. Okay. Next slide. So the family has been continuing to buy back shares. Even in 2026, we have bought back shares. So since the IPO, we've bought back roughly 9% of the company. So every time we saw the price drop to a level where we felt -- it was a good bargain, we would buy. We have stopped buying the last few days because we're in a trading ban because we are disclosing our results today, -- but once the trading ban is lifted, you can be assured as that price stays low, the family will continue to buy back. Okay. Next, so we are continuing to participate in various conferences, both domestic as well as internationally. The previous 1 was with the last week at the Grand Hyatt. And yes. So one reason why we like buying our shares back is just we know that the dividends are coming in pretty good. And yes, that's it in terms of what I wanted to present. So we're open to Q&A.

Okay. Thank you, Alvin. [Operator Instructions] I have a couple of questions lined up here. So let me just meet them. Okay. The first question comes from Dan Brian. Okay. First question, what is your outlook on palm and vegetable oil given the recent surge in petroleum prices. Second question, how are your FNB related orders currently amidst the oil prices? Third question -- how are your nonfood-related orders currently amidst the oil crisis. And he has a follow-up question, which I would also read now. Could you please remind us what products encompass the food commodity segment?

Okay. So first question, outlook on palm and vegetable oil. Typically, there is a correlation. So -- the way it works normally from what I understand, crude oil, meaning petrochemical crude oil usually affects soybean oil prices in the U.S. because soybean oil is fuel substitute. And then the effect on soybean oil has the domino impact on palm oil and then eventually, it reaches coconut oil as well. So crude oil prices have gone up a lot. But from what I can see so far, coconut oil prices have not gone up that much. Criss I'm not sure if you have a recent slide to show.

We do have. Let me just...

Yes. So okay. So while Criss is pulling that up. So thank you. There you go. So this is as of, I think, a couple of days ago. Yes, okay. So as you can see there, there is a slight uptick but it's not as significant as what we saw happening with crude oil. And I think a big factor here is that we're still near extremely high price levels for coconut oil. We're not at high levels for palm oil. But from what I understand, there's no there's really no shortage in terms of supply for both of these oils. So with prices having -- especially for coke oil peaked in August of last year at $3,000 a ton. It just went up too much. And so -- so the outlook is they may go up, but not as much as what's happened with petrochemical crude oil. So that's the first question. Second question was how our F&B related orders are currently amidst the oil crisis. I would say it's too early to tell because the Warren Iran started 2 days ago on February 28. But I have been hearing from business owners that -- they have seen a decrease in business. So not just F&B, hotels and other nonessential, non like travel and so forth. -- volume seems to be lighter in the month of March. That's what I have been noticing. What I heard was that January and February for the hotel. So the hotel industry is actually one industry that has been lagging in terms of recovery from COVID. So the lockdowns ended 2022, but our international arrivals in the Philippines was only at around the $6 million level last year million versus -- it's still down 20%, 30% versus the peak we saw in 2019 before COVID. So we were supposed to see continued recovery for international arrivals, especially for the hotel industry. January and February are supposed to be really good March may may not have done as well, we'll see. But in general, it's usually the case. Every time prices go up, especially for crude oil, that really sets the pace it affects everything -- the price of everything. And so there will likely be a dampener effect on the economy. That is very typical. And the F&B and even nonfood, we will see some impact as well. It's just how the way it is when costs go up, people spend -- they're not able to spend as much because more of their disposable income is tied up with essential goods. So that's question 2 and 3. Question 4 products at Encompass, food commodity segment. So that would be -- so we do trade cooked oil as well as palm oil, refined coconut oil, refined palm oil. Biodiesel is also a commodity. But when it comes to just food ingredients, it's really just what we call straight oils. So yes, you can see here in the slide more details. Refining Refined usually means RBD. That means refined, bleached, the odorized and could be palm oil and other variants also as coconut oil.

Okay. Next question comes from Dario Actually, he has 3 questions. First question for the commodities business is interest expense cost pass-through with clients. Second question for [indiscernible] plant. Could you elaborate more on why net profit has been trending down over the past few quarters? what has been performing above expectations? And what has not been performing quite up to expectations? Last question, I believe you touched on this, but in case you want to add something else. So how do you see higher oil prices impacting the business?

So first question about commodity business. Yet, we do pass on interest expense to our customers. So every time we price a product for sale -- we look at all of the costs, logistics, cost of money, insurance, so on and so forth. And interest expense is part of that. In terms of the Batanes plan, so yes, the income has been trending lower. I would say it's really a function of us varying the production between the Batangas plant and all the other plants. So Medanos plant is our biggest plant, but it's just 1 of 7 plants that we have. And it's normal for a company to tweak what we make across the different plants. Well, the other factor here is that -- we don't make any body diesel in the butanes plan. And with the Batangas -- sorry, with biodiesel being our biggest volume driver last year, -- it's -- we just saw more profits coming from the biodiesel plant, but Batangas didn't benefit from that. So that's another factor. But yes, that's -- I would say -- since the plant has already been operation for 3 years, maybe we don't need to focus so much on how the Batangas plant is doing I mean at least not focusing so much on the income from the plant. I think what we've been able to show is that we reached profitability earlier than than we projected, and it's already accretive to our business. And I think that's the most important point. In terms of how higher oil price is impacting us. So it's actually not just higher -- of course, higher prices for oil impacts everything eventually. That means our costs go up. But for us, since we do price pass-throughs, the effect is we're able to pass it on. I think a bigger worry for a lot of companies, including us, is with the closure of the state of homes and the closure of a lot of petrochemical producing assets in the Middle East, will that reduced supply. And that, I would say, is probably the bigger worry a lot of companies have. And I am aware the government has been making a lot of statements to reassure everyone, not to worry about supply, but it is a common discussion point across many industries, many companies, many countries I would say that is as big a factor, not just price.

All right. The next question comes from Martin [indiscernible]. So you mentioned margins are more driven by product mix than raw material prices. Can you quantify mix impact versus raw material price impact in full year 2025? -- if mix is a key driver, why did margins still compress significantly during the coconut oil spike?

If you overlay this chart, so this is our product mix chart. If you overlay this against the -- I think it's the next slide, with the margins, there you go. You can really see the trend. So of course, the product mix is not the only factor affecting our margins. The high price of coconut oil last year, I mean we definitely are able to pass on price changes. If not, you would see much bigger volatility and fluctuation in our margins compared to what's shown here. I mean coconut oil prices going from $1,000 to $3,000 a tonne. That's a huge change. And I don't hear what business you're in, if your raw material price goes up by 3x, your margin is going to be impacted. But -- so there is a change, but we're not seeing that level of volatility. I guess the other factor here is that when prices change, we do see a lag for commodity, which is roughly half of our business now, the general rule, when prices change in the market, our selling price changes immediately. But for our high-margin product, there is usually that 30- to 45-day lag because our customers typically order between 30 to 45 days ahead, we agree on the volume, but we also agree on the selling price. And we fix that price. What happens is when the raw material price goes up, we tend to lose out because prices went up. But after that 30-, 45-day period, we can adjust. So it's not a perfect pass-through -- but effectively, it still is a pass-through, it's just a lag. I'd say, though, again, looking at where cooking oil prices were looking at how prices peaked last year, hitting $3,000 a tonne level. I'd say one big -- so let's compare coconut oil to how not just crude oil has moved. Let's build a jet fuel, for example. For those of you who track crude oil prices, you probably -- you're aware -- there is no 1 benchmark crude oil price. The 2 most quoted are West Texas Intermediate, WTI, which is the U.S. benchmark and then Brent, which the benchmark in Europe. But the Philippines actually doesn't use WTI or breadth for its pricing. It uses Dubai. You've got -- then you've got jet fuel price as well, which is another benchmark altogether. I mean -- so Jeti from what I saw yesterday is at or around $200 a barrel. So that's I believe that is why yesterday, we were hearing news about the possibility that the Philippines and other countries might have issues as far as review in place. So compared -- the reason I bring this up, if you look at how coconut oil has moved, however, it's probably moved less than 10%. And from the 250 level, it's now at 20, 380. So what's that maybe a 5% change. It's not -- they're just I think it's accepted in the market, the prices really went up too much. So -- so that is, I would say, positive for us. It's good for our margins going forward. It's also good for our cash flows going forward.

All right. Next question comes from Rene given current events, any risk for the biodiesel blend to be pulled back to 2%? Also, any supply challenges in resins?

So for people who don't see the breakdown of how our pump prices are calculated, it's very tempting to just drop everything that's more expensive. So you've got excise tax that is actually bigger. I believe that 12% -- I mean you can do the math. It's huge. -- excise tax, I think, is at PHP 6 per liter Biodiesel, I think, it's maybe 1 vessel effect currently or maybe less actually with pump prices as high -- I believe the DOE yesterday's guidance was as high as PHP 134 per liter for diesel. That's actually higher than the price of biodiesel now. So I don't think it would make sense to reduce the blend of biodiesel because it's actually a cheaper fuel compared to regular diesel. Now -- so actually, it would make more sense to increase the blend. So I'd say there's a lot of major reaction, drop the price because we don't want prices as high now because it has so much negative effect. But I believe we need to look at the details more closely. It's not as simple as just dropping everything. And then the other question was about supply challenges in resins. Definitely, there are supply changes. I mentioned earlier with shutdowns and blockages, it affects supply. And that is a concern we have.

Okay. Next question comes from Ford. Is the lower inventory days due to lower volume stock for raw materials? If so, which raw materials?

Lower inventory base is -- well, so we saw -- when we saw prices of coconut oil, not just coking oil here. Almost everything prices went up last year. And when things are more expensive, it's more expensive for us to carry them. So it's just part of our efforts to be a more efficient company to try to reduce the cash that's stuck in inventory. So I would say that's the bigger factor. It's not -- and I think there was no worry about supply before February 28. So it was really a price game. You could buy as much as you wanted. You just have to pay the price. I don't think that's the case anymore. There is -- I don't think there's a lot of commodities now that's in unlimited supply. Things are not as fluid in terms of supply now for a lot of industries.

Okay. Next question comes from Peter Wang. So coconut prices seem to stabilize at still a high level about $2,500 per metric ton. -- how will this impact our margins going forward, especially for a supposedly high-margin business segment like food ingredients. And by the way, in the last quarter, had the profit after tax for food in means turnaround from losses in the past quarters?

Good observation, Peter. I thank you for continue to follow us very closely. So yes, our Food segment is doing better. And it did better in the fourth quarter compared to the previous -- to the second and the third quarter. Are margins going forward, so I did touch on this earlier, but I don't mind repeating this. When prices of raw materials go up, our capability to pass on price changes is something that we've been able to -- because that's really our business model. That's really how we are as a company. And it is something we can do. But -- if you look at the breakdown of what we sell the bulk of what we sell is not petrochemical related. So Criss, could you go back to the breakdown of revenue by the 4 major divisions -- there you go. So -- so what's petrochemical-related here? So that's 100% of specialty plastics to 6%. Consumer Products ODM, you've got packaging let's just assume everything there is petrochemical-related even if it's not, but it's not food, okay. Then you've got everything else, 91%. A -- so part of Chemrez is petrochemical related, but a big chunk of it is by diesel as well as oleo chemicals. And -- so we've got probably 75% or 3/4 of our business in non petrochemical. I guess this is the benefit of being a kind of diversified company being in several different segments. So petrochemical margins will be challenging definitely. But as I mentioned earlier, it's really supply that's a bigger worry because if you have supply, you can really dictate prices. And that's something we saw in previous crisis. So our company has been around since 1963. We've been through the first oil crisis in 1973, the second oil crisis in 1979. I don't think Criss was more than -- but I was already around, but I was still in short path in great school -- but I've heard the stories. I -- and other crises as well in the '80s, in the '90s, in the 2000s, and of course, we had COVID recently. And then when Russia attacked Ukraine, I think we're still going to be okay just because we do have that business model that allows us to survive so yes, our high-margin segments should still be okay. And again, our worry is not really the margins because most of what we sell is actually not petrochemical based. And the costs are not going up as much -- the bigger worry we have is really making sure we can maintain supply. And of course, on what's happening with the economy, that would be, I would say, the bigger worry.

All right. Next question comes from Denise Joaquin. How exposed is B&L the supply chain disruptions from the war and which raw materials are inputs could be the most affected? Second question is management looking to provide an earnings guidance for the year.

So I can go to that second question because it's easier to answer. All our budget forecasts that we made last year, having thrown up the window because things have just changed so much. All our assumptions, interest rates, dollar cost exchange rate, price of crude oil, economic growth, nothing is the same anymore. So we are not in a position to forecast net income or earnings guidance. What we can say is that -- we have seen a lot of crises before. And like if you look at how we did in 2022, when Russia attacked Ukraine, that was actually a record year in terms of net income. Of course, you had other factors like the reopening of the economy and so forth. But if you look at how we did in past crisis, I'd say we didn't do too badly -- so it's just how our business model is and how we are as management in terms of how we run the ship. So your original question, how exposed are we to supply chain disruptions in the war and which raw materials or inputs are affected. It's not as -- so what I'm hearing from -- so luckily, we have a lot of people in the company who still remember what happened in the '17. So I've been interviewing them. And I've been reading reports as well from what I understand, Things have not gotten as bad compared to -- in the '70s, I heard there was rationing, people were literally pushing their cars to the gas station because the cars didn't have gas anymore. You had upon. So to buy gas at the pump, you need a coupon, things like that. We're not there yet. So things are not that valued. I think -- what's happened is access to media, especially social media, the day it happened, we saw videos of Dubai airport smoke coming out. We saw buildings, excluding and things like that. Media just has accelerated that fear that we have. I would say that's been the biggest impact so far, and that's what's driving all the sentiment. But we're nowhere at least from the conversations I've had with Cyrus people, we're nowhere near the effects that we saw from a lot of the past crisis. So yes, I'd say it's still early days. There will be impact, but I think everyone is just pricing everything in -- even in stock prices. It's just how the market is at the moment.

Okay. Next question comes from Brian. What percentage of revenue or how much of revenue is coming from Batanes plant? So I can actually take this around 25% Okay. I saw someone earlier in his hand. Let me just check Okay. I think this question has been answered already. I don't see anyone raising his hand. Okay. That's all the questions that I can see from my end. [Operator Instructions]. Okay. I got a question here from Peter among the 4 business segments. In terms of profitability, which segments you will be most bullish on and vice versa. -- seems to me that the profitability for specialty plastics will be significantly impacted by the war. What about the other major 2 business segments?

Great question. That's something we have been discussing a lot in the last few weeks. Unfortunately, we're if things don't improve it will really impact all our businesses. There are -- I don't think any of our segments will be spared. And it's not just lack of supply. It's not just expensive raw material costs. It's really the effect on the overall economy. Our company provides a lot of very basic essential raw materials to industry in the country. If the economy does slow down, we're just going to be impacted. That's really how we are positioned as a company. So still early, but I don't I don't think there's any probability that any of our businesses will not be impacted yes.

All right. Thank you, Alvin. I don't see any more questions from my end. So if no more questions, that concludes our full year briefing. Again, if you have further questions later on, you can always reach out to us. So thank you very much for attending our full year briefing, and we'll see you next quarter.

Thanks, everyone. Good morning.