JG Summit’s core profits dip slightly in 2017

Chris Schnabel

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JG Summit’s core profits dip slightly in 2017
Its earnings from its petrochemicals unit are offset by losses from URC and Cebu Pacific

MANILA, Philippines – JG Summit Incorporated (JG Summit), the holding firm of the Gokongwei Group, saw its bottom line remain relatively flat in 2017 as earnings from its petrochemicals unit offset the sluggish performance of its airline.

In a report to the stock exchange on Friday, April 13, JG Summit attributed to equity holders its net income of P29.37 billion for the whole year 2017, up by 169% from P10.92 billion in 2016.

The firm noted, however, that its bottom line in 2016 was heavily affected by P16.71 billion in impairment losses, when the market value of the firm’s 8% stake in PLDT Incorporated declined.

Excluding non-recurring items, JG Summit’s consolidated core net income totaled P29.56 billion for 2017, down slightly from the P29.97 billion seen in 2016.

The result, the firm noted, “was mainly due to lower net income of our airline which was affected by the rise in fuel prices which offset double-digit growth in petrochemicals and gains from United Industria Corporation (UIC), Manila Electric Company (Meralco) and Global Power Business Corporation (Global Power).”

Petrochemicals up, URC and Cebu Pacific down

JG Summit’s consolidated revenue totaled P273.45 billion in 2017, up P13.7% from the P240.50 billion in 2016, while its operating expenses for the year increased 13.6% to 50.16 billion from P44.14 billion in 2016.

Universal Robin Corporation (URC) accounted for the bulk of revenues, seeing an increase of 11% to P125.01 from P112.61 billion in 2016.

Despite this, net income dropped 13.1% to P10.89 billion from P12.87 billion in 2016 due to a 3.8% decline in its flour business and losses from the firm’s newly-created joint ventures.

JG Petrochemicals Group was the biggest gainer, seeing revenues up 42.4% to P41.41 billion from 29.07 billion in 2016, for a net income increase of 16.9% to P5.99 billion fromP5.13 billion in 2016.

The firm’s airline, Cebu Pacific Air, saw a revenue increase of 9.9% to P68.04 billion from P61.09 billion on a 3.2% increase in passenger volume and 3.8% increase in average fares.

Higher fuel prices, however, saw the airline’s net income drop 18.9% to P7.91 billion from the P9.75 billion seen in 2016.

Robinson’s Land Corporation saw its revenues drop to P22.45 billion in 2017 from P22.75 billion in 2016 due to lower real estate sales with net income up 2.3% to P5.88 billion.

JG Summit’s earnings from investments, meanwhile, increased by 21.2% to P9.91 billion from P8.18 billion in 2016, primarily from a 34.5% increase in earnings from UIC, 12.4% increase from Meralco, and the full year take-up in equity earnings from Global Power, 30% of which it acquired in July 2016, totaling P709.19 million.

The firm’s earnings before interest, taxes, depreciation, and amortization hit P70.67 billon up from P69.37 billion seen in 2016.

As of end-2017, JG Summit’s total consolidate assets stood at P739.45 billion, with a net debt-to-equity ratio of 0.50. – Rappler.com

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