JG Summit posts P3.37-B net loss on airline, input cost woes
Gokongwei-led conglomerate JG Summit Holdings turned unprofitable in the third quarter as input cost pressures narrowed operating margins alongside continuing challenges faced by its airline business.
JG Summit incurred an attributable net loss of P3.37 billion in the third quarter, a reversal of the P844.1-million net income in the same period last year.
This resulted in a nine-month net loss of P2.44 billion compared to a net income of P124 million in the same period last year. This also reversed the P937-million net income generated in the first semester.
For the full year, market consensus is expecting JG Summit to deliver a net profit of P15.48 billion.
Worst-hit
Excluding the books of Cebu Air, the business worst hit by the prolonged pandemic, JG Summit reported a nine-month core income of P14.46 billion, 36.3-percent better year-on-year. Including Cebu Air’s books, but removing nonrecurring items, nine-month core profit amounted to P948 million.
Cebu Air incurred a net loss of P22 billion at end-September due to higher fuel prices and maintenance-related expenses, higher interest and accretion expense amounting to P1.8 billion, and foreign exchange loss arising from the peso depreciation. The petrochemical business, on the other hand, incurred a net loss of P423 million, although this marked an improvement from the P1.9-billion net loss in the same period last year.
The conglomerate reported its recovery had been halted by a weaker third quarter performance amid the reimplementation of stricter quarantine measures in Metro Manila.
Green shoots
“Although third quarter presented challenges to some of our subsidiaries, we have seen green shoots in the market and recovery in consumer demand for products and services as vaccination rollouts [accelerated] and mobility restrictions [eased] starting November,” JG Summit president and chief executive Lance Gokongwei said in a disclosure to the Philippine Stock Exchange on Friday.
“We anticipate these developments to positively impact our airline, hotels, malls and food segments. While the sentiment is getting better, our margins will be affected by inflationary pressures driven by higher oil and input prices as well as the devaluation of the peso. Our plan is to manage these headwinds through better pricing and cost management measures. Overall, we remain optimistic that the situation will continue to improve and JG Summit will benefit from the diversity of our portfolio and the strength of our balance sheet. We expect to pivot back to recovery in 2022 and reach pre-COVID levels by 2023,” he said.
Group-wide revenues in the third quarter amounted to P50.4 billion, up by 9 percent year-on-year.
