Gokongwei-led JG Summit Holdings returned to profitability in the quarter ended September on the back of its strong food, banking and office business segments. The conglomerate said Friday it was well positioned to face further challenges from the COVID-19 pandemic.
JG Summit posted consolidated net income of P844 million in the third quarter, a turnaround from net losses of P720 million the first six months of the year, it said in a statement. Core net income after taxes in the nine months to September was at P1.2 billion.
Consolidated revenues in the first nine months of the year was at P167.3 billion, down 27% from the same period in 2019. The stronger business segments temper declines in its airline, hotel, mall and petrochemical ventures, JG Summit said.
“The business continue to face challenges brought about by COVID but I am encouraged by our results in the third quarter," said JG Summit President and CEO Lance Gokongwei.
"Weaker consumer sentiment will continue to affect demand for products and services in the near term thus we remain cautiously optimistic. We will however focus on execution to build on and continue the momentum that have started in Q3," he said.
Here's how JG Summit is doing per business segment:
Food: Universal Robina Corporation (URC)
Total URC’s topline for the first nine months was flat at P99.8 billion. This was driven by slower recovery of consumer sentiments in the Philippines and Southeast Asia, offsetting the growth on Agro-Industrial and Commodities (AIC). Domestically, the shift towards in-home consumption and higher demand for snacks, biscuits, noodles and powdered coffee compensated for the decline in ready-to-drink tea, candies and the food service channel. In international markets, the strong underlying performance of the Oceania region were tempered by Australian and New Zeland dollars' forex devaluation, as well as Vietnam and Thailand’s challenged results. Meanwhile, the growth in AIC’s flour and sugar sales exceeded the negative impact of the downsized farm operations.
Better product mix and cost management, coupled with lower debt and interest expense, led URC to report net income of P7.5 billion, up 7%.
Real Estate and Hotels: Robinsons Land Corporation (RLC)
From exhibiting the effects brought upon by the pandemic in the second quarter, RLC reported a strong quarter-on-quarter recovery in net income to P717 million in the third quarter. This was mainly driven by the improved performance of our malls, hotels and residential businesses and sustained expansion from office and warehouse leasing businesses.
Looking at the nine months to September, property revenues fell 13%, as the adoption of the new accounting policy on residential revenue recognition plus the double-digit growth in offices and warehouses tempered the significant decline in malls and hotels.
RLC’s streamlined operations and cost management softened its EBITDA decline. But the additional depreciation from newly-opened properties as well as interest expense on newly-issued loans pulled nine-month net income down to P4.4 billion, 31% lower.
Air Transportation: Cebu Air (CEB)
The COVID 19 situation in the Philippines has begun to show signs of improvements with the gradual resumption of domestic and international flights. This is evident in CEB’s upward quarter-on-quarter trend on the number of flights and passenger volumes which more than doubled and tripled, respectively, in the third quarter vs the previous quarter’s record lows.
However, the limitations on frequency of flights and varying requirements and processes from local government units continue to be a challenge, resulting in nine-month revenues of P19.3 billion, a 70% decline. Passenger revenues were down 74% while ancillaries decreased by 69% due to lower passenger volumes. Seat load factor also declined to 79% in the nine months to September vs 87% during the same period in 2019. Meanwhile, CEB’s cargo operations were sustained with higher average yields cushioning the volume decline.
CEB’s third quarter net loss narrowed to P5.5 billion from the previous quarter driven by cost savings on operations and fuel consumption on top of the quarter-on-quarter buildup in passenger volumes. CEB closed the first nine months of 2020 with a net loss of P14.7 billion.
Petrochemicals: JG Petrochemicals Group (Petrochem)
Improving plant utilization rates, rebound in market demand, as well as lower naphtha prices led Petrochem to report positive earnings in the third quarter, a significant improvement from the reported losses in the first two quarters.
he third quarter posted softer year-on-year revenue decline as the unfavorable petrochemical prices across its segments were offset by higher sales volume due to improving utilization rates. In addition, the local market demand has rebounded especially for essential goods resulting in higher polymer sales for packaging, blow molding, and yarn. Export sales were also strong as more countries open up from lockdowns. Coming from planned facility shutdowns in the first quarter and demand challenges in the second quarter due to the ECQ, better third quarter sales drove Petrochem’s nine-month revenues to P14.5 billion, 45% lower.
Meanwhile, profitability turned positive in the third quarter with EBITDA and Net Income of P1.6 billion and P772 million, respectively, on the back of lower naphtha cost used in production. This brought nine-month numbers to a negative EBITDA of P251 million and net loss amounting P1.9 billion.
Banking: Robinsons Bank Corporation (RBank)
Nine-month revenues totaled P6.9 billion, a 14% increase on the back of a 14% loan growth which was mostly led by the faster expansion of consumer loans, and trading gains which amounted to P896 million.
Despite the higher loan loss provision of P770 million in the first nine months due to risks related to the pandemic, the year-on-year topline growth as well the 52-basis point improvement in net interest margins led to a net income of P786 million, a 68% growth.
(Summit Media, which publishes Reportr.World, is a member of the Gokongwei Group)