JG Summit’s 9-month profit falls 30.3%

Gokongwei-led conglomerate JG Summit Holdings saw a 30.3-percent year-on-year decline in consolidated net profit in the first nine months to P14.8 billion due to the slump in the petrochemical and food businesses while the airline unit incurred losses in the third quarter.

Excluding nonrecurring items, JG Summit’s core profit during the period also fell 21.6 percent to P17.78 billion, the company disclosed to the Philippine Stock Exchange on Friday.

For the third quarter alone, JG Summit’s core net profit fell 19 percent year-on-year to P5.5 billion. However, the pace of decline had tapered relative to the 23-percent core net income drop in the first two quarters of the year.

JG Summit said its airline and petrochemical businesses continued to face margin pressures from higher fuel prices.

The airline business under Cebu Air incurred a net loss of P529 million in the third quarter, bringing the nine-month net profit to P2.8 billion, 36 percent lower than year-ago level.
Apart from the third quarter being seasonally leaner for the airline business, Cebu Air was also adversely affected by the rise in fuel prices and the weakening of the peso against the dollar. Operating expenses also surged on higher lease and lease return obligations, in turn due to the shift from owned to leased aircraft through sale and leaseback transactions of older aircraft.
The petrochemical business saw a 61-percent decline in nine-month profit to P1.9 billion while net in the third quarter slid by 81 percent to P340 million due to unexpected plant shutdowns and weaker regional demand.

The slower pace of decline in net profit was attributed to the following: Recovery in Universal Robina Corp.’s operating margins on the back of higher selling prices in its domestic branded consumer foods business, improvement in Vietnam operations alongside better cost management, and Robinsons Land Corp.’s (RLC) sustained double-digit growth.
RLC grew its nine-month net profit by 44 percent year-on-year to P6.6 billion on double-digit growth in earnings from its development and investment portfolios. For the third quarter alone, RLC’s net profit surged by 96 percent year-on-year to P3.2 billion.

“Given our long-term view, we plan to continue investing wisely for growth as well as transform/strengthen our organizational capabilities so we reap the benefits when the cycle turns more favorable,” JG Summit president and CEO Lance Gokongwei said in a statement.