JG Summit posts P3.5-billion profit ahead of full recovery

JG SUMMIT Holdings, Inc. on Wednesday reported a consolidated core net income last year of P3.5 billion, which it said was 672% higher than the figure a year earlier and largely driven by its property business as well as contributions from its investments.

In a statement, the Gokongwei-led diversified conglomerate said it remains on track to full recovery from the negative impact of the coronavirus disease 2019 (COVID-19) pandemic after last year’s mixed set of results.

“Our food and banking segments continued to be stable while the mobility restrictions and quarantine measures still affected our real estate (specifically malls) and airline businesses. It is noteworthy though that we have seen sequential recovery quarter on quarter as the vaccination rollout accelerated towards the second half of 2021,” said Lance Y. Gokongwei, president and chief executive officer of JG Summit.

Excluding airline Cebu Air, Inc., JG Summit last year recorded consolidated revenues that it said exceeded pre-pandemic levels by 7% while its core net income reached 96% of the level in 2019. The budget carrier continued to deal with heightened travel restrictions.

Including the airline’s performance, total revenues grew 13% year on year to P230.6 billion after the partial reopening of the economy helped JG Summit’s food, real estate, petrochemicals, and banking segments.

JG Summit said the airline also recorded “strong sequential improvements” quarter on quarter. Cebu Air ended 2021 with a net loss of P24.9 billion “driven by higher fuel prices, maintenance-related expenses, interest, and strong peso depreciation.”

Food business unit Universal Robina Corp. (URC) registered a 3% growth in revenues to P117 billion largely due to the growth of its commodities and international segments despite an overall market contraction.

In the local branded consumer food group, revenues fell by 2% although the company is said to have displayed sequential recovery from a “muted first half” as it posted a year-on-year growth of 5% in the fourth quarter.

URC said pricing actions, operating expense optimization, gains from asset sales, and tax savings outweighed the input cost pressures from “unprecedented spikes” in commodity prices. These factors brought a 23% increase in net income to P13.2 billion, apart from the gain on the sale of its Oceania business.

Meanwhile, the real estate and hotel business ended last year with Robinsons Land Corp. (RLC) posting a 53% increase in net income to P8.1 billion as revenues rose by 29% to P35.6 billion.

RLC attributed the improvement to the contribution from its Chengdu, China project, along with realized sales of its Bridgetowne properties, and the “resilience” of its offices, which offset the softer demand in the residential and mall divisions.

Last year’s income was also boosted by the sustained recovery of its earnings before interest, taxes, depreciation, and amortization (EBITDA) for most business units, along with the benefits of the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act, and the listing of its real estate investment trust company.

Petrochemicals business JG Summit Olefins Corp. recorded a net loss of P2.1 billion last year because of higher depreciation cost and interest charges, as well as foreign exchange losses.

Banking unit Robinsons Bank Corp. posted a profit rise of 33% to P1.2 billion due to loan expansion, stable net interest margins and improved cost-to-income ratio. Revenues increased by 1% to P9.3 billion, driven by a 14% surge in loans, and higher commission income, which was offset by lower trading gains.

Mr. Gokongwei said that while 2022 started with the rapid spread of the virus variant Omicron, he is hopeful that the more relaxed mobility restriction would have a positive impact on the demand for the group’s products and services.

“We are cautious though that headwinds continue to affect us with the current volatility in oil prices, rising input costs and peso devaluation will result to margin pressures. To mitigate this, we will continue to be proactive in managing pricing and product mix while simultaneously putting in place productivity initiatives across our businesses.” he said.

Mr. Gokongwei said JG Summit had recalibrated its long-term objectives, goals, strategies and measures “and we are now actively implementing alignment to further enhance value creation through our ecosystem to ensure we emerge as a stronger business post-COVID and the years to come.”

On Wednesday, JG Summit shares rose by P1.10 or 1.83% to close at P61.30 each at the stock exchange.