By Madelaine B. Miraflor
The lower profit booked by JG Summit Holdings, Inc.’s (JGS) airline and food businesses dragged the overall financial performance of the listed conglomerate for the entire 2018.
In a filing with the Philippine Stock Exchange, JG Summit disclosed that its consolidated net income fell about 53 percent to P19.2 billion from the 29.37 billion it booked in 2017, as it recorded market valuation losses on financial assets and derivative instruments and foreign exchange (forex) losses amounting to P1.0 billion and P2.9 billion, respectively.
Its core net income after taxes for 2018 also went down by 24 percent to P22.4 billion from P29.56 billion.
“The decline was mainly attributable to the exposure of our cyclical businesses, namely CEB (Cebu Pacific) and Petrochem (JG Petrochemical), and our food business, URC (Universal Robina Corporation), to higher fuel and input costs, as well as the weaker peso,” JG Summit told the local bourse.
In addition, the group incurred higher financing cost on the back of CEB’s fleet expansion and higher Petrochem trust receipts.
During the period, the company’s revenues rose by 7 percent year-on-year to P291.9 billion driven by Robinsons Land Corporation’s (RLC) solid performance across all its segments, CEB’s robust passenger and cargo revenues, and Robinsons Bank’s (RBank) sustained growth momentum.
These were slightly tempered by URC lower coffee volumes and Petrochem’s lower polymer sales for the year, and the flat earnings contribution from the group’s affiliates Meralco, Global Business Power, United Industrial Corp. and PLDT.
“We may say that the group braved a perfect storm in 2018. Our cyclical and food businesses were challenged by high inflation and fuel prices, weaker peso, as well as intense competitive dynamics,” JG Summit’s President and Chief Executive Officer, Lance Y. Gokongwei said.