JG Summit books P6.5B in core profit after Meralco selldown

The Gokongwei family’s JG Summit Holdings Inc. said profit in the first nine months of the year surged nearly 1,000 percent after booking a windfall from the sale of part of its stake in power distribution giant Manila Electric Co. (Meralco).

One of its most lucrative investment assets, the sale of a 3.2-percent Meralco stake last July helped the conglomerate earn core profit of P6.5 billion during the period versus P600 million in the same period last year.

JG Summit still owns 26.4 percent of Meralco, the country’s biggest electricity retailer, after raising P12.4 billion from the sale.

Core earnings were also propped up by the 34-percent jump in total revenues to P224.8 billion during the nine-month period due to contributions from Universal Robina Corp., Robinsons Land Corp. and Robinsons Bank.

It said airline subsidiary Cebu Air, operator of budget airline Cebu Pacific, saw “saw strong recovery as travel restrictions were eased.”

JG Summit said it also recorded foreign exchange losses on its offshore debts following the sharp deprecation of the peso against the US dollar. This contributed to consolidated losses of P859 million, an improvement of 64 percent over the same period in 2021.

“Our core businesses in food, airline, real estate and banking continue to benefit from the sustained strong demand brought about by the increase in economic activity and mobility despite the high inflationary environment while our petrochemicals business continue to suffer from weaker export demand,” JG Summit president and CEO Lance Gokongwei said in a statement on Thursday.

“We have implemented strategies from gradual pricing actions and cost management initiatives to cushion the impact on our bottom line and margins,” he said.

“While we anticipate to finish the year stronger with topline momentum continuing into the [fourth quarter], our stance on margin recovery remains cautious,” Gokongwei added.

Meanwhile, the company said gains were tempered by the shutdown of its petrochemical plants from May to August 2022 amid weak global demand.

These plants restarted from August to September “although below full capacity, as supply-demand dynamics improve while remaining cautious with the lingering global recession sentiment.”

During the nine-month period, JG Summit Olefins Corp. recorded a loss of P9 billion as revenues fell 4 percent to P26.2 billion.

JG Summit said other core investments in PLDT Inc. and Singapore Land Group delivered stronger earnings during the nine-month period.