J.G. Summit Holdings, Inc. Reported P12.6 billion in Core Net Income in Q12024, Up 213%

One of the top Philippine conglomerates, JG Summit Holdings, Inc. (JGS), reported first-quarter core net income of P12.6 billion (1Q24), an increase of 213% YoY. This was on the back of the strong results of its food, real estate, and air transport businesses, which were further boosted by the gains it realized from its bank merger.

This strong profitability was driven by an 18% increase in consolidated revenues to P96.7 billion in 1Q24, with topline growth continuing at all of its subsidiaries. The conglomerate's petrochemical unit's greater plant utilization and the sharp increase in its airline's worldwide operations were the main drivers of this.
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The baseline for the rise of JGS' core net income was set by its airline's increased capacity and enhanced efficiency, its property arm's record-breaking EBITDA, and its food and beverage business's expanding volumes and steady margin uplift. The P7.9 billion gained from the Bank of the Philippine Islands and Robinsons Bank merger, which went into effect at the beginning of 2024, was added to this. The strong performance of its listed companies culminated in a 16% increase in the group's consolidated core profits even in the absence of the merger gains. Given the higher mark-to-market (MTM) losses and lower foreign currency (FX) gains throughout the quarter, JGS's net income for the first quarter of 2023 concluded at P11.0 billion, which is already more than half of the company's full-year results.
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JGS maintains a strong financial position that allows it to maintain growth throughout all of its subsidiaries. Its net D/E ratio is 0.58, and its consolidated D/E ratio is 0.70. When examining the parent company in greater detail, cash decreased by 5% while net debt climbed by 3% from the end of 2023. However, JGS anticipates receiving P9.9 billion in dividends in 2Q24. This is an 8% increase over the same period last year (SPLY) since JGS expects its listed food and property companies to pay out larger total dividends in the upcoming quarters, making up for PLDT's 2023 special dividends not being paid. 

JGS President and CEO Mr. Lance Y. Gokongwei acknowledges the conglomerate’s first quarter performance, saying, “We kicked off 2024 with sustained improvements across our businesses, seeing robust sales volumes in our petrochemical and food businesses, as well as strong demand for air travel, leisure, and hospitality services. Margins have been buoyed by a combination of volume growth, managed input costs, and operating leverage. We have also begun seeing green shoots in our petrochemicals arm as value realization has begun for its commercial and operational initiatives. 

Looking ahead, we continue to work on growing our airline’s capacity to serve the gradual uptick in demand, driving volume-based growth in our food and beverage business, sustaining the momentum in our property unit, and accelerating the transformation program of our petrochemicals arm. We will also continue to support our ecosystem plays, which are on the path to attaining scale via customer acquisition and new product launches.” 
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The top line of Universal Robina Corporation (URC) increased by 7% in comparison to SPLY, resulting in P42.6 billion in total revenue in 1Q24. This was caused by the increase in its branded consumer food, agro-industrial, and commodity segments, which were driven by volume. With revenues growing at a rate more than twice as fast as earnings, 1Q24 EBIT increased from P4.7 billion to P5.4 billion. The 16% YoY EBIT growth and stronger reinvestments in advertising and promotions were made possible by operating leverage that resulted from higher sales volumes, more favorable input costs, and more efficient operations. In addition, net income increased at a quicker rate of 21% to P4.1 billion because of higher foreign exchange gains and the absence of the impairment loss the company recorded the previous year (LY).
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Additionally, it continued building the URC Mega Plant in Malvar, Batangas, which will have cutting-edge production capabilities. It maintained 90%+ domestic order fill rates through 2024. Although URC's market share figures remained inconsistent, they are beginning to improve as volumes increase. In addition, URC anticipates growing its cash return to shareholders, having increased dividends for four years in a row, and reaching Php3.5 billion in share buybacks by the end of the first quarter.
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All of Robinsons Land Corporation's (RLC) businesses reported strong topline results, particularly in their hotels and malls, where consistent customer spending was observed. This resulted in a notable 18% increase in sales for the first quarter, reaching P10.5 billion. EBITDA, meanwhile, increased 22% YoY to P6.1 billion, breaking records once more. Along with EBITDA, the company's core and net earnings increased to P3.3 billion, rising 22% and 25% from SPLY, respectively.

When considering its businesses, the occupancy rate for malls and offices, at 93% and 84%, respectively, remained higher than the industry average. Additionally, it finished the Sierra 2 warehouse and GBF 1 office. In April of last year, the business launched its first residential project for MIRA, a property in Cubao.

The sustained travel demand and steep improvement of its international short-haul flights lifted Cebu Air, Inc.'s (CEB) first quarter topline to P25.3 billion from P20.9 billion in 2023. This was propelled by the 5.5 million passengers it flew in Q1, up 14% vs SPLY. This may be largely attributed to travelers returning from the Christmas holidays, as well as trips taken during the Easter break and other festivals and events. Average fares further boosted revenues, growing 9% YoY. EBITDA jumped 61% YoY to P6.6 billion, with higher seat load factor, lower cost per average seat kilometer, and more favorable jet prices vs the previous year. These also translated to a 54% YoY growth in core net income to P1.8 billion. After incorporating FX gains and the absence of last year’s MTM losses, net income doubled YoY to P2.2 billion in Q12024.
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By investing in a larger fleet, the airline was able to increase operational resilience and capacity, resulting in CEB having 17 more aircraft at the end of Q12024 compared to SPLY. As a result, during the peak period, on-time performance held steady at 77%, while customer satisfaction, as shown by the net promoter score, increased year over year. 

JGSOC saw improvements in its sales volumes across all segments, expanding 65% YoY, coming from its planned shutdown during February and March of 2023, as well as higher utilization rates and improved asset reliability vs LY. This translated into revenues growing 62% YoY to P14.1 billion in Q12024. However, the business remained challenged given the recent uptick in  naphtha costs and the failure of polyethylene and polypropylene market prices to adjust upwards. Nonetheless, healthy aromatics and butadiene spreads coupled with the reduction of operating costs per unit resulting from its business wide transformation program helped JGSOC keep its EBITDA largely flat at a P0.9 billion loss. The company’s bottomline felt downward pressure from higher interest expense, depreciation on its new facilities, and FX losses leading it to close the quarter at a P3.3 billion net loss in Q12024, coming from a P2.7 billion loss SPLY.

The transformation program is still in progress, with value realization having already started. These include the deployment of energy optimization initiatives that led to a 55% reduction in power cost per production ton vs. SPLY, the building up of the utilization rates of the company's newest polyethylene unit to maximize cost efficiency and increase flexibility in manufacturing product grades, and the data-driven analytics tools for pricing optimization and deal guidance that are already in use for JGSOC's polymer sales.
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Since there were no special dividends declared in Q12024, JG Summit's dividend income from PLDT, Inc. (TEL) decreased by 22%. Regular dividends, however, increased by 1 peso to P46 per share.
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The company's equity earnings from Manila Electric Co. (MER), which increased 19% YoY, more than compensated for this. Higher distribution sales volumes and improved performance from its power generation, retail energy delivery, and non-power-related industries were the main drivers of this.