JG Summit core 2016 net profit at P29.97B

Gokongwei-led JG Summit Holdings Inc. posted a 6.9 percent increase in consolidated core net income to P29.97 billion last year as the double-digit income growth of its airline and petrochemicals businesses made up for the slack in branded consumer foods business and dividends from PLDT Inc.

However, a hefty P16.71 billion impairment loss booked primarily due to the decline in market value of JG Summit’s 8-percent stake in PLDT translated to a 51.7 percent drop in headline net profit to P10.92 billion last year.

In accordance with the current Philippine Accounting Standard (PAS) 39, if a decline in fair value of an equity investment is significant or prolonged, the impairment is recognized one-time in net income rather than in equity. But in 2018, upon effectivity of the new International Financial Reporting Standard (IFRS) 9, JG Summit said its consolidated net income for the year ended 2016 would be restated with the market valuation losses on PLDT investment charged directly back to equity.

Excluding the effect of the impairment loss from PLDT, JG Summit’s consolidated net income from equity holders of the parent amounted to P27.63 billion last year, up by 22.2 percent from the previous year.

Cash flow increased by 8.6 percent to P69.27 billion while consolidated revenues rose by 4.9 percent to P240.5 billion last year.

Among its key operating units, airline operator Cebu Air, JG Petrochemicals Group and Robinsons Bank were the outperformers last year.

Cebu Air saw a 122.3 percent growth in net profit last year to P9.75 billion. Total revenues went up by 9.6 percent to P61.9 billion mainly due to 4.1 percent growth in passenger volume and 4.9 percent increase in average fares.

JG Petrochemicals Group posted a 62.4 percent growth in net profit to P5.13 billion. Revenues increased by 8.6 percent to P29.07 billion due to higher sales volume.

Robinsons Bank’s net income last year amounted to P256.65 million, up by 140.6 percent.

On the other hand, food manufacturing arm Universal Robina Corp. (URC) and property arm Robinsons Land Corp. (RLC) both reported lower profits.

URC’s net income decreased by 7.1 percent to P12.87 billion for the year. Sales were “muted as an aftermath of the hiccups in its supply chain operations,” the company reported. Total revenues slightly increased to P112.61 billion from P112 billion in 2015 due to the revenue growth in the sugar, feeds and renewables businesses, offset by the decline in sales of branded consumer foods group.

RLC’s net income stood at P5.75 billion, down by 3.5 percent from last year’s level, because of an increase in interest expense. However, RLC’s revenues increased by 12.1 percent to P22.75 billion due to higher rental income and real estate sales.