JG Summit Holdings Inc., the diversified conglomerate of the Gokongwei Group, said Friday strong performances delivered primarily by its food, real estate and airline business bolstered its core net income in the first half nearly seven times higher to P9.5 billion from the P1.4 billion posted in the year-earlier period.
Total revenue rose 12 percent year-on-year P163.4 billion in 1H23, even with the absence of sizable contributions from Robinsons Land Corp.’s residential project in China that were mostly recognized in the second quarter of 2022. Excluding that item, JG Summit’s consolidated revenue was up 23 percent.
JG Summit said that net income attributable to shareholders of the parent company was P10.38 billion in the first half on account of a more favorable foreign exchange environment. As restated, JG Summit booked a loss of P2.75 billion.
For the second quarter alone, net income surged to P5.37 billion from a restated profit of P43.9 million. Revenue for the quarter was flat at P81.14 billion.
“The group’s earnings improvement further accelerated in the second quarter with the sustained demand recovery and growth across our food, airline and property businesses. On top of this, initiatives across our business units to tackle cost inflation and implement efficiencies to recover our margins continue to bear fruit,” Lance Gokongwei, president and chief executive officer of JG Summit, said in a statement.
“We are now working double time to augment our capacity and improve operational resiliency by adding more planes for Cebu Pacific, addressing the supply chain issues in URC (Universal Robina) to increase order fill rates, and improving RLC’s (Robinsons) occupancy rates and carefully launching new project developments. Meanwhile, we have begun ramping up our petrochemicals operations after months of being shut down. I am confident that we would be able to sustain this positive momentum for the balance of the year as we proactively carry-out initiatives to stay ahead of the curve,” Gokongwei added.
Additionally, JG Summit’s balance sheet also remains robust to support continuous growth across the group. Its consolidated gearing and net D/E ratios as of end-June registered at 0.7 and 0.54, respectively. Meanwhile, with the receipt of dividends from its investee companies totaling P9.1 billion in 1H23, parent net debt fell 8 percent vs end-2022 to P50.7 billion. This leaves the parent company with enough flexibility to fund future investments.
URC saw first half revenue increase 11 percent to P78.6 billion while net income stood at P6.7 billion. The food company acquired in May for P900 million the assets of Central Azucarera Don Pedro Inc., an acquisition that would increase production at its Balayan sugar mill.
Robinsons Land increased first-half net income by 23 percent to P5.8 billion on strong recovery in malls, as well as the steady improvement of its residential, offices, and hotels. The company raised P15 billion from the issuance of its fixed-rate bonds, improving ability to fund various projects.
Budget carrier Cebu Air Inc., which flies under the brand Cebu Pacific, more than doubled its first half revenue to P43.6 billion on surging travel demand, especially with the reopening of most international markets. First half net income stood at P3.7 billion, pushg the airline’s equity to positive territory at P726 million at the end of June. Cebu Air expects to close the year with 78 aircraft, taking delivery this year of 17 planes while exiting 15.
JG Summit said its petrochemicals business continued to suffer from low global demand and competitive pricing from easing input prices, pushing down first half by 31 percent to P14.2 billion. Plant operations were shut down in February to mitigate the further losses because of negative margins. The petrochemicals business lost P2.1 billion loss due to a longer 5-month shutdown, compared to only 2 months in the first half of 2022.
Robinsons Bank Corp., the banking arm of JG Summit, saw the continued double-digit growth in its higher-yielding consumer loans, which offset the 5% decline in commercial loans. The lender’s gross revenues increased by 28 percent in the first half at P6.4 billion. But higher non-performing loans and interest expenses as well as share in the startup losses of GoTyme have crimped net income in the first half by 27 percent P700 million.
Robinsons Bank will be merged with Bank of the Philippine Islands in January.
JG Summit said its core investment in Manila Electric Co., the country’s largest power distributor, yielded a gain of P4.6 billion in the first half, up 22 percent, while its share in Singapore Land Group’s first half income fell 18 percent to P1.2 billion due to delays in completion and sale of certain projects. It added that dividends from PLDT Inc. improved by 40 percent to P1.4 billion due to a regular dividend that is 7 percent higher plus a special dividend of P14 per share.
