JG Summit expects sustained growth for 2nd half

JG SUMMIT Holdings, Inc. expects to sustain its growth for the second half of the year due to the country’s continuing economic recovery, its top official said in a corporate event on Thursday.

“We expect the second half to continue to be positive relative to the previous year,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei told BusinessWorld.

Mr. Gokongwei added that the company’s core businesses would mainly benefit from confidence among consumers as they return to malls, travel, and retail shopping.

“It’s [the] economic growth in the country and we’re benefiting again from people going back to being more mobile,” he added.

His optimism comes after the company reported an attributable net income of P10.38 billion in the first half of the year, a reversal of the P2.75 billion net loss the prior year.

JG Summit’s consolidated revenues for the six-month period went up by 11.8% to P163.39 billion from P146.14 billion in the same period last year.

The company’s budget carrier Cebu Pacific is also expecting continued passenger growth for the latter half of the year as the demand for travel increases.

“People are more confident [with travel],” Mr. Gokongwei said, adding that the airline is restoring more flights, particularly for international destinations, while bringing in additional aircraft. 

“So that [bodes] well for the future in terms of growth,” he said.

“The dark cloud now is oil prices are rising so that may affect our cost structure, but overall, we are seeing some return to travel,” he said.

Cebu Air, Inc., the listed company that operates the airline, saw a reversal of its net loss during the first semester, reporting an attributable net income of P3.75 billion, a turnaround from the P9.5 billion the prior year.

Its revenues more than doubled during the period to P43.55 billion from P20.68 billion the prior year, driven by a significant increase in passenger volume and flight activity.

Meanwhile, Mr. Gokongwei said that the group would look into the effects of the proposed “junk food” tax on the company’s food and beverage unit Universal Robina Corp.

“We have to see first what the law says. First, I think it is inflationary, and second, it can be anti-poor,” he said, citing the proportion of lower-income people who allocate a larger part of their basket for food compared with wealthier people.

“I think it’s very difficult to define what’s junk food so I think it could create potential imbalances. But, I don’t think it’s the best way to collect taxes,” he added.

Finance Secretary Benjamin E. Diokno said earlier that the government is pushing for taxes on junk food and sweetened beverages to address “diabetes, obesity, and noncommunicable diseases related to poor diet,” as well as raise P76 billion in additional revenues in the first year of implementation.

On Friday, JG Summit shares fell by 2.93% or P1.15 to P38.05 apiece. — Adrian H. Halili