Bank merger lifts JG Summit bottom line by 16%
Higher revenues and gains from merging its banking business with that of the Ayala Group’s buoyed the nine-month earnings of Gokongwei-led JG Summit Holdings Inc., with the conglomerate expecting better consumer spending once the country’s macroeconomic environment improves.
In a stock exchange filing on Wednesday, JG Summit, whose businesses include food, real estate and transportation, said its bottom line in the January to September period was at P17.9 billion, up by 16 percent.
Growth was driven by revenues of P277 billion, up 10 percent, and gains from merging Robinsons Bank with Bank of the Philippine Islands early in the year. In the third quarter alone, revenues were flat at P89.1 billion, while net income declined by 39 percent to P3.1 billion.
Losses
This was due to losses in JG Summit Olefins Corp. (JGSOC), the holding firm’s petrochemicals unit.
“While the overall macro environment is expected to rebound with the easing inflation, most of our businesses are still affected by the weaker consumer sentiment that has dampened demand for products and services,” JG Summit president and CEO Lance Gokongwei said in a statement.
“We, however, expect a better fourth quarter to finish the year on a good footing,” Gokongwei added.
Broken down per business, snack maker Universal Robina Corp. saw an 11-percent uptick in earnings to P9.2 billion on the growth of its international business. Lower sugar profits tempered the increase, with operating income slipping by 3 percent to P12.3 billion.
Revenues were flat at P118.9 billion.
Strong performance
Real estate under Robinsons Land Corp. registered a 4-percent growth in its top line to P29.3 billion on the strong performance of its mall and hotel businesses, which offset weakness in the residential segment.
Earnings reached P10.01 billion, up by 13 percent.
Higher travel demand propelled the revenues of Cebu Air Inc., operator of budget carrier Cebu Pacific, by 11 percent to P74.5 billion.
JG Summit noted, however, that higher depreciation and financing costs related to Cebu Pacific’s fleet expansion caused a 33-percent decline in profits to P3.4 billion. At the same time, “unfavorable global market conditions” widened the net loss of JGSOC to P11.4 billion from P8.8 billion last year.
For its part, JG Summit said it would focus on “being more selective with its export markets, fortifying governance over its pricing process and launching best-in-class reliability programs” to support JGSOC.
