JG Summit operating profit rises, but forex losses drag Q1 earnings

JG SUMMIT Holdings, Inc. reported a 27% decline in first-quarter (Q1) net income from continuing operations to P5.5 billion, as foreign exchange (forex) translation losses on its dollar-denominated debt offset growth in revenues and operating profit.

In a statement on Wednesday, the listed conglomerate said consolidated revenues rose 7% to P99.9 billion from P93.3 billion a year earlier, while operating profit increased 9% year on year to P17.1 billion, driven by record passenger volumes at Cebu Air, sustained volume growth in Universal Robina Corp.’s (URC) branded foods business, and higher recognized residential revenues at Robinsons Land Corp. (RLC)

Core net income after tax declined 8% to P6.9 billion, mainly due to higher parent-level interest expense associated with debt absorbed from its discontinued petrochemical unit, a larger minority share in its real estate investment trust, and softer sugar prices in its commodities sub-segment.

Including the significant reduction in losses from discontinued petrochemical operations, reported net income increased 19% to P5.2 billion during the quarter.

“Our first quarter results reflect steady execution across our portfolio, with 7% revenue growth and a 9% increase in operating profit — a combination that demonstrates the underlying efficiency of our business,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said.

Mr. Gokongwei said the group continues to navigate heightened geopolitical and macroeconomic uncertainty, with rising fuel costs and peso depreciation pressuring margins and consumer purchasing power.

URC, the group’s food and beverage unit, posted a 6% increase in revenues to P47.9 billion, driven by sustained volume growth in its branded consumer foods business in the Philippines and stronger contributions from its international, animal nutrition and health, and flour segments.

URC’s net income, however, declined to P4 billion due to softer sugar prices, frontloaded advertising and promotional spending, and higher freight costs linked to the Middle East conflict.

RLC posted an 11% increase in revenues to P12.2 billion, supported by resilient contributions from its investment portfolio and higher recognized residential revenues. Net income rose 2% to P3.5 billion after accounting for a higher share of minority interests in its real estate investment trust.

Cebu Air, Inc., the group’s airline unit, posted a P0.4-billion net loss, mainly due to the unfavorable translation impact of a weaker peso on its dollar-denominated debt. Revenues rose 10% to P33.3 billion, while earnings before interest, taxes, depreciation, and amortization increased 26% to P8.4 billion on lower fuel expenses from pre-war procurement.

The airline carried a record 7.5 million passengers in the first quarter, up 8% year on year, while domestic market share increased to nearly 58%.

Among JG Summit’s core investments, equity income from Manila Electric Co. rose 4% to P2.8 billion, supported by stronger performance from its power generation business, particularly liquefied natural gas and solar assets.

Dividend income from PLDT Inc. declined during the quarter after dividends fell by P1 per share to P46.

JG Summit said its consolidated debt-to-equity and net debt-to-equity ratios stood at 0.73 and 0.55, respectively. The company expects dividend inflows to rise 16% year on year in the first half, enabling it to declare a cash dividend of P0.45 per share, up 7% from last year.

Shares in JG Summit fell 3.41% to close at P25.50 apiece on Wednesday. — Alexandria Grace C. Magno