The Gokongwei group expects the profit of its airline and food businesses to improve starting the fourth quarter of this year through 2012 as the high input costs that dampened operating income early this year were now easing.
The softening in global commodity prices is seen benefiting Cebu Air Inc., operator of Cebu Pacific airline, as well as Universal Robina Corp., said Lance Gokongwei, president of both Cebu Air and URC.
“Europe and America might be slowing down but Asia will continue to grow albeit at a slower rate than expected,” Gokongwei told reporters on the sidelines of the Asean 100 Forum Thursday.
“The drop in commodity prices is very positive for companies like URC and Cebu Pacific which use a lot of commodities as our inputs. So we’re hoping for positive years ahead,” Gokongwei said.
Because of higher inputs costs earlier this year, URC sees operating income declining by 10 percent this fiscal year 2011 compared with its earlier expectation of a flat performance.
In the first nine months ending June 2011 (its fiscal year ends in September), URC reported a 12.4-percent decline in operating income to P5.45 billion from a year ago. Unaudited net income attributable to equity holders of the parent thus decreased by 25 percent to P1.54 billion for the nine months compared with the same period last year.
But Gokongwei noted that overseas operations have been robust. “We’re performing very strongly. In dollar terms, we’re growing by about 40 percent and profits continue to improve,” he said.
With regards to the impact of the softening of global commodity prices this second half on URC, Gokongwei said: “We should start seeing the benefits in the fourth quarter.”
For Cebu Air, Gokongwei said the July-September period was seasonally the weakest quarter because of the rainy reason.
But Gokongwei said Cebu Air was still on track with its target in terms of passenger traffic.