JG Summit Holdings Corp., led by the Gokongwei family, has decided to cease operations at its petrochemical business, JGSOC (JG Summit Olefins Corp.), citing persistent losses and unfavorable market conditions in the global petrochemical industry. The company said the shutdown is indefinite as the business struggles with prolonged downturns in the global petrochemical markets.
In a statement, JG Summit said the JGSOC will continue selling from its existing product inventory during the shutdown period. However, the company emphasized that its LPG trading operations, managed by subsidiary Peak Fuel Corp., will not be affected.
This development comes on the heels of JG Summit’s third-quarter performance, where its consolidated revenue remained flat at P89.1 billion, compared to P87.94 billion in the same period last year. Net income fell 38 percent to P3.1 billion from P4.99 billion. The decline was attributed to deepening losses in the petrochemical sector, as well as weak performance of Universal Robina Corp. (URC) and Cebu Air Inc.
The JGSOC shutdown is a significant shift for JG Summit which previously counted on its petrochemical operations as a key contributor to its portfolio. The company said it is evaluating various options to address the challenges in the sector and would make further decisions in due course.
