JG Summit profit fell by 24% in 2018

Gokongwei-led conglomerate JG Summit Holdings saw a 24-percent drop in core net profit last year to P22.4 billion as higher fuel and input costs gnawed on the earnings of its airline, petroleum and food businesses.

Including extraordinary items, net profit attributable to equity holders of parent firm fell by 34.7 percent during the year to P19.2 billion.

The profit decline was due to the exposure of its cyclical businesses—Cebu Air, JG Petrochemical and Universal Robina Corp. (URC)—to higher fuel and input costs, as well as weaker peso.

In addition, it incurred higher financing cost on the back of Cebu Air’s fleet expansion and higher petrochem trust receipts. It incurred market valuation losses on financial assets and derivative instruments as well as foreign exchange losses hitting P1 billion and P2.9 billion, respectively.

Group-wide revenue for the year rose by 7 percent to P291.9 billion, driven by Robinsons Land Corp.’s solid performance across all its segments. Cebu Pacific’s robust passenger and cargo revenues and Robinsons Bank’s sustained growth momentum also contributed to the topline growth.

The growth in revenues, however, was tempered by URC’s lower coffee volumes and JG Petrochemical’s lower polymer sales for the year. Earnings contributions from affiliates Manila Electric Co., Global Business Power, United Industrial Corp. and PLDT were flat.

Full year equity in net earnings of associated companies and joint ventures rose by 3 percent to P10.2 billion. This was driven by the 18-percent year-on-year growth in equity earnings from Meralco for the period as JG Summit acquired additional 2.4-percent stake in Meralco in June 2017.