JG Summit Holdings Inc.’s consolidated first-half core net income plunged by 37 percent year on year to P13 billion as higher fuel costs and foreign exchange pressures on its airline business more than offset gains from its property, food and investment segments.
Consolidated revenues, however, increased 7 percent in the first half to P200 billion from P194 billion a year earlier, the conglomerate said on Wednesday.
JG Summit said the profit drop was mainly due to the weak performance of Cebu Air Inc. in the second quarter — historically a strong period for the airline — following a sharp increase in fuel prices.
This was further aggravated by higher interest expenses incurred at the parent level after taking on debt previously held by its petrochemical subsidiary.
Cebu Air, operator of Cebu Pacific, posted an 8-percent increase in revenue to P68.6 billion as passenger traffic remained resilient despite higher fares.
The airline carried 14.5 million passengers, up 4 percent from a year earlier, while average fares increased 2 percent systemwide.
Higher fuel costs, however, drove Cebu Air’s earnings before interest, taxes, depreciation and amortization (Ebitda) down 40 percent to P10.5 billion, with average fuel prices rising more than 60 percent.
The airline’s first-half net loss reached P5.9 billion, further pressured by fleet-related financing costs and unrealized foreign exchange losses on foreign currency debt.
Despite the losses, Cebu Pacific’s domestic market share increased to 65 percent in April-June quarter from 56 percent a year earlier. Its international capacity share, however, slid to 23 percent from 25 percent.
Universal Robina Corp. (URC) provided earnings support, with revenue growing 4 percent to P89.3 billion and net income increasing 10 percent to P6.9 billion. URC’s operating profit was broadly flat at P9.4 billion as pricing actions and a more favorable product mix offset higher oil-related costs and weaker sugar prices.
Robinsons Land Corp. also delivered stronger results, with revenue increasing 10 percent to P25.4 billion and core net income rising 5 percent to P7.2 billion. Its performance was supported by higher office and mall occupancy, additional warehouse space, increased hotel capacity and a rebound in residential sales.
Regarding investments, JG Summit’s share in Manila Electric Co.’s net income increased 15 percent to P7.1 billion, while equity income from Singapore Land Group jumped 61 percent to P2.3 billion.
This resulted in P13.6 billion in dividends received at the parent level, up 17 percent from a year earlier.
JG Summit’s reported net income from continuing operations declined 47 percent year on year to P11.4 billion after accounting for non-core unrealized foreign exchange losses arising from the peso’s depreciation.
Including discontinued operations, total net income fell 29 percent to P10.7 billion. The group’s consolidated debt-to-equity ratio stood at 0.72 times as of end-June, while net debt-to-equity was 0.58 times.
JG Summit President and CEO Lance Gokongwei said the group’s diversified portfolio continued to provide support despite the challenges facing the airline business.
“Our first-half results reflect the underlying resilience of our diversified portfolio — with 7 percent topline growth carried by our broad-based property gains and resilient food business, alongside our airline, which benefited from healthy passenger volumes despite higher fares,” he said.
Gokongwei said profitability challenges were expected to continue in the second half, particularly for the airline, as fuel prices remained elevated and the third quarter entered a leaner travel season.
The company also expects inflationary pressures to continue creating uncertainty around consumer spending and topline growth in the near term.
JG Summit shares on Wednesday rose P0.55. or 2.45 percent, to close at P23.00 each.
