February 9, 2023

Filipino Guardian

Sentinels of Filipino Free Press

JG Summit income hits P6.5B as economy improves

JG SUMMIT Holdings, Inc.’s nine-month core net income reached P6.5 billion, more than 10 times the P600 million reported for the same period last year, as the Gokongweis’ consumer-facing businesses improved.

“Our core businesses in groceries, airlines, real estate and banking continue to benefit from continued strong demand driven by increases in economic activity and mobility,” said Lance Y. Gokongwei, JG Summit’s president and chief executive officer, in a Disclosure on the stock exchange on Thursday.

He added that the publicly traded holding’s petrochemical business is suffering from “weaker export demand”.

From January to September, consolidated revenue was P224.8 billion, up 34% from last year’s level.

In the third quarter, the company’s consolidated net loss narrowed to P859 million from a loss of P2.4 billion a year earlier. The improvement comes after sales rose 46% to P73.7 billion, despite being tempered by the May-August shutdown of its petrochemical plants.

“We have implemented strategies of incremental pricing actions and cost management initiatives to mitigate the impact on our bottom line and margins,” said Mr. Gokongwei.

He added that while the company expects to end the year stronger and its topline maintains momentum in the fourth quarter, “our stance on margin recovery remains cautious.”

Earlier in the third quarter, JG Summit posted a P3.2 billion portfolio management gain after selling its 3.2% stake in Manila Electric Co.

For nine-month earnings, the company’s petrochemical business fell 4% to 26.2 billion pesos on lower polymer sales.

JG Summit Olefins Corp. (JGSOC) offset lower polymer sales with sales from trading in aromatics, butadiene and liquefied petroleum gas.

JGSOC posted a net loss of 9 billion pesos for the nine-month period due to higher interest rates and foreign exchange losses.

Meanwhile, JG Summit’s banking segment saw revenue grow 11% to P7.7 billion for January-September.

“This was due to strong credit expansion and higher fee income from its fast-growing credit card and merchant acquiring businesses,” the company said.

Also, Robinsons Bank Corp. posted higher net interest income of 5.8 billion pesos, up 17% on rising global interest rates and faster growth in higher-yielding loans.

In a separate disclosure, JG Summit said its board has approved a proposed infusion of P5 billion into JGSOC. The additional capital is intended to be “primarily used to settle its outstanding obligations from its expansion projects and to address the uncertainty of the petrochemical industry.”

The capital increase will be through a cash purchase of shares, with JG Summit subscribing for additional JGSOC shares issued from existing unissued shares.

JGSOC operates a naphtha cracking plant and associated facilities to produce polymer grade ethylene, polymer grade propylene, pyrolysis gasoline, mixed C4, pyrolysis fuel oil and other products and their by-products.

On Thursday, JG Summit shares fell 4.18% or P1.90 to close at P43.60 each.