MANILA, Philippines—Gokongwei-led JG Summit Holdings saw a 26.3 percent decline in six months of net profit to P5.98 billion from a year ago as its share of net earnings from operating units declined while treasury gains were also reduced by the capital market volatility.
For the second quarter alone, JG Summit’s net profit attributable to equity holders of parent stood at P3.2 billion compared with P3.3 billion in the same period in 2010.
The company reported that its share in the profits of its airline business, Cebu Pacific, was reduced to 67 percent following Cebu Pacific’s initial public offering in October 2010, where the group sold 33 percent of its ownership.
JG Summit also recorded lower market valuation gains on its financial assets due to the volatility in the capital markets.
The conglomerate’s core earnings likewise declined by 15.2 percent for the six month-period to P9.71 billion while cash flow as measured by earnings before interest, taxes, depreciation and amortization dipped by 6.5 percent to P18 billion from a year ago.
Consolidated revenues were up by 15 percent to P70.26 billion from a year ago due to the strong performance of all business units. However, its share in the net earnings of associates showed a decline by 38.2 percent to P1.18 billion during the period.
Group-wide cost of sales and services for the first half increased by 27.4 percent to P42.82 billion, higher than the revenue growth as input costs of food business increased substantially as compared to the same period last year. The aviation fuel expenses incurred by Cebu Pacific also rose significantly due to the increase in fuel prices and higher volume of fuel consumed.
Consolidated operating expenses increased by 16.2 percent as a result of higher general and administrative expenses in its telecommunications, increased airline operations and food business.
Mark-to-market gains on financial assets recognized during the first half amounted to P414.52 million, 47.6 percent lower than a year ago due to the decline in market values of bond and equity investments for the period.