JG SUMMIT Holdings, Inc. posted a 175% jump in second-quarter (Q2) net income to P10.7 billion, driven by strong performances in its airline, real estate, and food and beverage businesses, reduced losses in its petrochemical segment, and gains from compensation related to aircraft engine issues.
Consolidated revenue grew by 5% to P95.9 billion, while core profit surged by 87% to P10.4 billion, driven by the expanding operations of its air transport, property, and food and beverage businesses, as well as a gain recognized from engines provided by Pratt & Whitney as compensation for ongoing aircraft-on-ground issues, the conglomerate said in a regulatory filing on Monday.
“This was supported by robust leisure demand benefiting its airline and property businesses, alongside the sustained domestic consumption seen by its food & beverage arm. These more than made up for the expected decline in petrochemical sales given the plant shutdown which began early this year,” JG Summit said.
“Overall, we are optimistic about the future prospects of the business and will continue to look for opportunities to scale up into adjacencies in airport infrastructure, supply chain/logistics, and digital finance,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said.
“We continue to see sustained topline performance from our core business units as we benefit from improving consumer sentiment driven by easing inflation. This growth has trickled down to improving core earnings, further helped by the lower losses from the shutdown of our petrochemicals facility. We also expect higher dividends this year coming from our core units and investments,” he added.
FIRST-HALF EARNINGS STEADYFirst-half net income was steady at P15 billion, while consolidated revenue increased by 3% to P194 billion.
Core profit dropped by 19% to P14.8 billion amid the absence of the P7.9 billion gain from the merger between the Bank of the Philippine Islands (BPI) and Robinsons Bank Corp. that was booked in the first quarter last year.
The food and beverage business led by Universal Robina Corp. saw a 5% drop in first-half net income to P6.3 billion due to a one-time impairment loss following the cessation of operations of the packaging division.
Revenue rose by 6% to P85.9 billion on higher volume in most of its branded consumer foods Philippines categories, its Malaysia and Indonesia markets, and its sugar division.
The real estate and hotels businesses led by Robinsons Land Corp. saw a 5% increase in first-half net profit to P6.9 billion amid lower interest rates, which outweighed the additional depreciation recorded from newly opened properties.
Revenue went up by 11% to P22.2 billion on higher realized revenues from high-value residential projects and strong ready-for-occupancy unit sales.
The air transportation segment through Cebu Air, Inc. saw a 153% growth in first-half net income to P9 billion, boosted by gains from engines received as compensation from Pratt & Whitney.
Revenue rose by 23% to P63.3 billion on the back of a 21% increase in passenger volumes, higher passenger yields, and 43% more cargo kilograms carried year on year.
The debt of the petrochemical business led by JG Summit Olefins Corp. (JGSOC) has been transferred to JG Summit, and cash burn has also been significantly reduced, while its liquefied petroleum gas trading arm continues to operate.
“From the time the prolonged shutdown of JGSOC’s petrochemical plant was approved by the board in May, the first phase of initiatives focusing on asset preservation, organizational rationalization, and balance sheet management has been completed,” JG Summit said.
“Management has also been actively engaging with various parties as it explores strategic possibilities, further deepens its understanding of market dynamics, and identifies the most viable path that will maximize value for the company,” it added.
JG Summit said its share in the net income of Manila Electric Co. grew by 5% to P6.1 billion in the first half on the back of higher sales volumes in its distribution business and improved contributions from its power generation segment.
Equity income from Singapore Land Group Ltd. grew by 9% to P1.5 billion due to higher contributions from property investments as well as better occupancy and rental rates from commercial properties.
PLDT Inc. paid dividends of P47 per share, translating to a 2% increase in dividend receipts to P1.1 billion for JG Summit. BPI also declared higher dividends, contributing to a 5% increase in income from the conglomerate’s investment.
JG Summit shares rose by 1.96%, or 45 centavos, to P23.45 per share on Monday. — Revin Mikhael D. Ochave