JG Summit posts P2.7-B loss on inflation, forex crunch

The Gokongwei family conglomerate JG Summit Holdings Inc. said business in the first half of 2022 was weighed down by cost pressures and the sharp decline of the Philippine peso, leading to a P2.7-billion loss.

Nevertheless, the company said key units, alongside investments in Manila Electric Co. (Meralco) and PLDT Inc., pushed up core earnings in the second quarter by 48 percent.

“Our overall business has benefited from the reopening of the economy as evidenced by the sequential improvement in our operating results on a quarterly basis,” JG Summit president CEO Lance Gokongwei said in a statement.

“We are cognizant that significant challenges remain in the near term with the extraordinary cost pressures, rising interest rates and peso devaluation,” he said.

“Our business units have implemented measures on how to mitigate the margin erosion through selective pricing actions and productivity initiatives,” he added.

Total revenues in the first half expanded by 29 percent to P151.1 billion, reaching 95 percent of the prepandemic level.

Profit drivers included Universal Robina Corp. and Robinsons Land Corp. Cebu Pacific operator Cebu Air Inc. lowered losses by 31 percent to P9.5 billion after pandemic travel restrictions were eased.

Earnings from associates Meralco, PLDT and Singapore Land Group rose nearly 36 percent to P5.4 billion. Last month, the conglomerate sold part of its holdings in Meralco, raising about P12.4 billion to strengthen its balance sheet.

Volatility in oil, input prices

Meanwhile, JG Summit said core earnings were still down amid the “unprecedented volatility in oil and input prices that negatively affected the group’s margins and was most felt in its petrochemicals business.”

JG Summit Olefins Corp. (JGSOC) ended June with a net loss of P5.3 billion despite a 14-percent jump in revenues as margins were eroded by the steep rise in naphtha consumption costs, interest payments and foreign exchange losses.

JGSOC said the petrochemical complex was also shut down toward the end of May due to weak demand from both domestic and export markets.

“As with several petrochemical companies in the region, bearish margins have prompted a number of manufacturers to similarly cut output or progress maintenance shutdowns in an effort to manage inventory levels,” according to JG Summit. INQ