JG Summit Holdings, Inc. Reported P187.8 Billion in Consolidated Reveneues for H1-2024

JG Summit Holdings, Inc. (JGS), one of the Philippines’ largest and most diversified conglomerates, generated a 99% increase in its core profits driven by the strong demand for travel and leisure activities as well as the realized gains from its bank merger at the start of the year.

Fueling this robust performance was the company’s double-digit topline growth of 13% and 15% year-on-year (YoY) in the second quarter (2Q) and first half (1H) of 2024, respectively. This brought JGS’ consolidated revenues to reach P187.8 billion in 1H24, as the group saw rising demand for tourism and recreation, along with increased petrochemical operations plus higher food and beverage sales volumes.

Boosted by the YoY margin improvement in its core businesses, higher equity earnings from its investment in Meralco, and the 1Q bank merger gain, JGS’ core net income after taxes totaled P18.1 billion in 1H24, twice the amount recognized in the previous year. Excluding the P7.9 billion merger gain, recurring core profits grew 12% YoY.
Meanwhile, reported net income, which incorporates non-core items such as foreign exchange (FX) and mark-to-market (MTM) losses, stood at P14.8 billion, up 43% vs the same period last year (SPLY).

Additionally, the conglomerate maintains its solid financial foundation for continued growth across the group as its consolidated D/E and net D/E ratios were at 0.67 and 0.55 as of end-June. At the parent company level, dividend receipts from its investee companies went up 13% YoY to P10.3 billion in 1H24, as increases from URC, RLC, and the first cash dividends received from BPI more than made up for the absence of PLDT’s 2023 special dividends. This effectively reduced parent net debt to P54.2 billion as of end-June 2024, or 5% lower vs end-2023.

JG Summit’s President and CEO, Mr. Lance Y. Gokongwei, recognizes the first half results of the conglomerate saying, “We continue to post overall topline growth despite the lingering effects of inflation which dampened consumer sentiment. We have seen a divergence of results from our operating units with the strong demand for travel and leisure benefiting our air transport and real estate businesses. Our food and beverage unit continues to deliver higher sales volumes, but product mix has changed into lower price point categories, while increased plant utilization in our petrochemicals unit pulled up revenues in the first half. Coupled with our initiatives to drive productivity and better operating leverage, we have now seen improvements in margins.

As we move to the second half, we hope to sustain this momentum with the expected decline in inflation that in turn could ignite the sequential rebound in consumer demand.

We will continue to execute our commercial strategies to drive topline growth while implementing overall operational discipline to ensure we sustain the year-on-year recovery in core net income and margins.”

Key performances per business unit are as follows:

Universal Robina Corporation (URC) posted revenues of P80.7 billion for 1H24, rising 3% with all business units seeing higher sales volumes. The company also sustained its margin expansion YoY as all its divisions displayed high single-digit to double-digit profit growth, except for Sugar and Renewables (SURE). This translated to 1H24 EBIT of P9.4 billion, up 10% vs SPLY. Looking at its 1H bottomline, core profits increased 5% YoY to P6.3 billion as higher tax provisions watered down the improvement in operating profits, while net income ended flat at P6.6 billion on lower FX gains and higher impairment losses.

Operations-wise, URC sustained its year-to-date (YTD) order fill rate at above 90% for its branded foods business in the Philippines, and further pushed the presence of its pet food business into the modern trade with smaller dog food pack sizes and its new cat food product. It has also made the decision to strategically exit its business in China, which would allow the company to redeploy resources to higher-growth markets.

Robinsons Land Corporation (RLC) was able to maintain a steady growth in its revenues at 8%, amounting to P20.0 billion in 1H24, as its rental incomes (Malls, Offices, Hotels, and Logistics) outpaced the decline in the recognized revenues for the Residential segment, which were mainly realized from the lower[1]than-average project sales during the pandemic. EBITDA improved 12% to P12.2 billion, resulting from more favorable utility costs and the gross profit mix shifting towards the higher-margin investment portfolio that saw double-digit growth YoY. Core and net profits of P6.0 billion and P6.5 billion, respectively, rose 9% vs SPLY, slightly slower than EBITDA due to the increase in minority share in its REIT company, RCR, following the block placement that occurred last April 2024.

Its Malls division maintained its occupancy rate at 93%, while Offices improved to 86% with the expansion of existing BPO tenants. Additionally, the company’s first and only launch so far in the year, MIRA Residences in Cubao, is already 78% sold as of the first half.

Registering record-high passengers flown in 2Q from the increased demand during the summer season and school holidays along with average higher fares, Cebu Air, Inc. (CEB)’s revenues for 1H24 expanded 18% YoY to P51.4 billion. EBITDA of P13.3 billion saw a steep improvement as well, growing even faster than topline at 39%, with fuel prices remaining steady during the period. Despite higher depreciation and financing costs as the airline expands its fleet, it saw 1H core profits rising 26% YoY to P3.7 billion. On the other hand, net income ended at P3.5 billion, a 5% decline YoY due to FX losses in 2024 and the absence of the MTM gains it recognized last year on its convertible bond derivatives.

CEB also solidified its domestic market leadership at 54% share, while international routes saw 32% more passengers in 1H24 compared to the previous year. These were accomplished through aircraft upgrades, additional routes, and increased flight frequencies. On forward-looking updates, CEB signed a memorandum of understanding with Airbus for the purchase of up to 152 aircraft in the succeeding years, while the airline also secured the approval of the Securities and Exchange Commission for its quasi-reorganization, which would provide a solid financial foundation for future growth.

Coming from a low base due to its 5-month commercial shutdown in the previous year, JG Summit Olefins Corporation (JGSOC) increased plant operations and registered higher sales volumes across all products this year, further aided by more targeted selling and more disciplined pricing. This allowed revenues to jump 80% YoY to P25.5 billion for the first half. However, subdued demand held back selling prices and kept polymer margins in the red, while healthy spreads from JGSOC’s newer products provided some cushion. This, along with increased operating costs, caused EBITDA to slip P0.4 billion YoY to end 1H at a P2.5 billion loss. Higher financing costs and additional depreciation from the fully completed plant expansion project led to a net loss of P7.4 billion. JGSOC continues to work on its business-wide transformation project, with initiatives already producing various wins such as higher premiums on booked volumes, continued strong sales momentum, more strategic spending on maintenance, and a reduction in spare part inventories.

JGSOC continues to work on its business-wide transformation project, with initiatives already producing various wins such as higher premiums on booked volumes, continued strong sales momentum, more strategic spending on maintenance, and a reduction in spare part inventories.

JG Summit’s share in Meralco’s income jumped 26% YoY to P5.8 billion as the boost in commercial activities and residential demand from higher temperatures increased sales volumes. This was further elevated by the gains from the company’s power generation segment.

Equity earnings from Singapore Land Group of P1.3 billion also saw a 15% improvement as its hotel business posted a robust performance, especially with the full operations of the Pan Pacific this year, along with increases in the company’s rental income.
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Dividends received from PLDT in 1H24 declined 22% to P1.1 billion due to the lack of special dividends declared in 2023. Nonetheless, its regular dividends increased by P1 to P46 per share.
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With the effectivity of the merger between Bank of the Philippine Islands (BPI) and Robinsons Bank at the start of the year, JGS received its first cash dividends from BPI at P1.98 per share, totaling to P373 million.