JG Summit Holdings Inc. said its net income dropped 29 percent last year to P27.89 billion, from the previous year’s P39.51 billion dragged by its airline and food units due to higher fuel and input costs, and the weaker peso.
Core income, meanwhile, also dropped 24 percent to P22.4 billion, from P29.56 billion.
“The decline was mainly attributable to the exposure of our cyclical businesses, namely CEB [Cebu Pacific Air] and Petrochem, and our food business, URC [Universal Robina Corp.], to higher fuel and input costs, as well as the weaker peso. In addition, the group incurred higher financing cost on the back of CEB’s fleet expansion and higher Petrochem trust receipts,” the company said.
Revenues for the year rose 7 percent to P291.9 billion, from the previous year’s P273.44 billion driven by its property development arm and the good performance across all its segments, Cebu Pacific’s robust passenger and cargo revenues, and Robinsons Bank’s growth momentum, it said.
The company said its revenues may have gone higher if not for URC’s lower coffee volumes and JG Petrochemical’s lower polymer sales for the year, and the flat earnings contribution from affiliates Meralco, Global Business Power, United Industrial Corp. and PLDT.
“We may say the group braved a perfect storm in 2018. Our cyclical and food businesses were challenged by high inflation and fuel prices, weaker peso, as well as intense competitive dynamics. We are more optimistic in 2019, but we would remain vigilant of various risks and continue strengthening our diverse strategic business units to ensure balanced sources of profitability,” JG Summit President and CEO Lance Y. Gokongwei said.
“We will also carry on our key initiatives in the areas of customer centricity to drive growth, a more active portfolio management to strengthen our core, digital transformation and sustainability,” he added.
URC’s full-year revenues grew a mere 2 percent to P127.8 billion on the back of higher average selling prices and volumes of agro-industrial and commodities’ sugar and flour divisions, strong recovery of branded consumer foods in Vietnam, and the consistent performance of its Australian unit.
These were pulled down by lower coffee volumes in the Philippines given the lingering intense competition.
Amid the intense competition from local players, revenues of Cebu Pacific increased by 9 percent year-on-year to P74.1 billion. Passenger, cargo and ancillary grew 9 percent, 19 percent and 6 percent, respectively, because of higher yields and volumes.
Core net income after taxes declined by 33 percent to P5.9 billion given the rise in jet fuel cost, weaker peso, higher interest rates, as well as the Boracay and airport runway closures.
Sales for the year of its petrochemical division were flat at P42.4 billion as higher average selling prices of most of its products were offset by lower volumes of pyrolysis gas and polymers. There were production issues in 2018 that resulted in lower utilization rates. The company said it saw weaker demand toward the latter part of the year when oil prices began to fall as customers waited in the sidelines, anticipating further drop in prices, it said.
Its banking unit posted revenues of P6.1 billion for the year, a 37-percent increase from the previous year driven by higher interest income from loans.