GOKONGWEI-LED conglomerate JG Summit Holdings, Inc. saw a 43% increase in its first-half attributable net income to P14.8 billion from P10.38 billion a year ago, driven by margin improvements in core businesses, higher equity earnings from investments in Manila Electric Co. (Meralco), and gains from the merger between the Bank of the Philippine Islands (BPI) and Robinsons Bank.
First-half consolidated revenue rose by 15% to P187.8 billion from P163.4 billion last year on rising demand for tourism and recreation, along with increased petrochemical operations, as well as higher food and beverage sales volumes, JG Summit said in a statement to the stock exchange on Monday.
JG Summit doubled its core net income after taxes to P18.1 billion.
“We continue to post overall top line growth despite the lingering effects of inflation which dampened consumer sentiment. We have seen a divergence of results from our operating units with the strong demand for travel and leisure benefiting our air transport and real estate businesses,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said.
“Our food and beverage unit continues to deliver higher sales volumes, but product mix has changed into lower price point categories, while increased plant utilization in our petrochemicals unit pulled up revenues in the first half. Coupled with our initiatives to drive productivity and better operating leverage, we have now seen improvements in margins,” he added.
Mr. Gokongwei said the conglomerate is aiming to sustain momentum in the remaining months of the year.
“As we move to the second half, we hope to sustain this momentum with the expected decline in inflation that in turn could ignite the sequential rebound in consumer demand,” he said.
“We will continue to execute our commercial strategies to drive top line growth while implementing overall operational discipline to ensure we sustain the year-on-year recovery in core net income and margins,” he added.
The food segment, Universal Robina Corp., had a flat first-half net income at P6.6 billion on lower foreign exchange gains and higher impairment losses. Revenue rose by 3% to P80.7 billion as business units saw higher sales volumes.
Core profits grew by 5% to P6.3 billion as higher tax provisions watered down the improvement in operating profits. The food and beverage company recently decided to exit its business in China to redeploy its resources to higher-growth markets.
On the real estate and hotels business, Robinsons Land Corp. (RLC) saw a 9% increase in first-half net profit to P6.5 billion due to the increase in minority share in its real estate investment trust company, RL Commercial REIT, Inc., following a block placement in April.
Revenue rose by 8% to P20 billion as the rental incomes of the property developer’s malls, offices, hotels, and logistics outpaced the decline in the recognized revenues for the residential segment.
RLC’s malls division maintained its occupancy rate at 93%, while the offices business improved to an 86% occupancy rate with the expansion of existing business process outsourcing tenants.
The airline business led by Cebu Air, Inc. recorded a 5% drop in its first-half net income to P3.5 billion due to foreign exchange losses as well as the absence of the mark-to-market gains recognized last year on convertible bond derivatives. Cebu Air operates budget carrier Cebu Pacific.
Revenues grew by 18% to P51.4 billion while earnings before interest, taxes, depreciation, and amortization climbed by 39% to P13.3 billion as fuel prices were steady during the period.
“Cebu Air also solidified its domestic market leadership at 54% share, while international routes saw 32% more passengers in the first half compared to the previous year. These were accomplished through aircraft upgrades, additional routes, and increased flight frequencies,” JG Summit said.
The petrochemicals business led by JG Summit Olefins Corp. (JGSOC) posted a P7.4-billion net loss for the first half on higher financing costs and additional depreciation from the completed plant expansion project.
Revenue surged by 80% to P25.5 billion on increased plant operations and higher sales volumes across all products, as well as more targeted selling and more disciplined pricing.
“JGSOC continues to work on its business-wide transformation project, with initiatives already producing various wins such as higher premiums on booked volumes, continued strong sales momentum, more strategic spending on maintenance, and a reduction in spare part inventories,” JG Summit said.
JG Summit saw a mixed performance across its core investments.
The share of JG Summit in Meralco’s income rose by 26% to P5.8 billion led by higher sales volume on commercial activities and residential demand due to higher temperatures.
Equity earnings from Singapore Land Group grew by 15% to P1.3 billion as the hotel business posted a robust performance, led by the full operations of the Pan Pacific this year, along with increases in the company’s rental income.
Dividends received by JG Summit from PLDT Inc. for the first half declined by 22% to P1.1 billion on the lack of special dividends declared in 2023.
Following the effectivity of the merger between BPI and Robinsons Bank at the start of the year, JGS received its first cash dividends from BPI at P1.98 per share, totaling P373 million.
On Monday, JG Summit shares were unchanged at P25.20 per share. — Revin Mikhael D. Ochave
