Wednesday, April 16, 2008 [ philstar.com ]
JG Summit Holdings Inc., the flagship holding firm of the family of taipan John Gokongwei Jr., reported a 33.4-percent jump in its net profit last year, driven by higher contributions from its airline, food, property and telecommunications units.
In a financial report filed with securities regulators, JG Summit said net earnings grew to P8.61 billion from P6.46 billion on the back of a 7.5-percent rise in revenues.
“Excluding the one-time gains and losses in 2006, net income attributable to equity holders amounted to only P3.83 billion, making the increase in recurring net income amount to 124.8 percent,” JG Summit said. Consolidated revenues amounted to P92.52 billion, compared with P86.06 billion a year earlier, with the group’s food subsidiary Universal Robina Corp. (URC) accounting for 40.8 percent of total.
The P37.72 billion contributed by URC represents an increase of 7.2 percent from the P35.18 billion recorded in 2006 on robust sales of its beverage, snack foods and animal feeds businesses.
JG Summit’s airline business, Cebu Air, was the group’s second biggest revenue contributor with record revenues of P15.02 billion or 54.5 percent higher than the previous level of P9.72 billion.
It carried almost 5.5 million passengers last year, up 58 percent from the previous level of nearly 3.5 million passengers, making it the single largest domestic carrier in the country today.
From a net income of only P196.79 million, Cebu Air — the carrier of the Cebu Pacific brand — hiked it net profit to P3.61 billion due to P1.9 billion in foreign exchange gains from the conversion of its dollar-denominated debt into pesos.
As for its real estate unit, Robinsons Land Corp. chipped in revenues of P8.28 billion or an increase of 24.8 percent from the year earlier’s P6.4 billion due to the continued strong demand for its residential condominium and BPO office projects. Digital Telecommunications Philippines Inc., (Digital) on the other hand, pumped in P8.31 billion in revenues, 8.9 percent higher than the previous level due to the increased subscriber base of its cellular business, Sun Cellular.
The significant increase in Suncellular’s revenues was attributed to Digitel’s aggressive roll-out of its network, which started in 2006. This compensated for the decline in its fixed-line service revenues caused by the continuing shift towards mobile telephony.
As a result, Digitel swung back to a net income of P1.17 billion from a net loss of P962.91 million mainly because of foreign exchange gains recognized on the translation of its dollar-denominated obligations, amounting to P5.15 billion from only P2.68 billion.
As for its petrochemicals unit, JG Summit Petrochemicals contributed lower revenues of P5.15 billion although it managed to narrow down its losses to only P722.4 million from a whopping P3.36 billion. In 2006, JG Petrochem recognized impairment loss of its assets amounting to P3.86 billion.
JG Summit said equity income of the International Capital and Financial Services Group likewise rose 50 percent from P1.08 billion to P1.62 billion because of higher income posted by UIC, a Singapore-based listed company in which JG owns a 33.5-percent stake.
The group’s equity income in First Private Power Corp, where it has a 20 percent shareholding, amounted to P234 million.
Other Income grew 83.6 percent from P6.54 billion to P12.01 billion while foreign exchange gains recorded during the year under review amounted to P7.21 billion as the peso grew stronger against the Dollar.
JG Summit said EBITDA (earnings before interest, taxes, depreciation and amortization) excluding non-recurring items went up 34.8 percent from P22.48 billion to P30.29 billion with major improvements in food, property, and airlines, boosted by growth in revenues, foreign exchange gains and better cost management.
Cost of sales and services increased to 11.3 percent to P47.61 billion as a result of an increase in the cost of raw materials in the foods business, the higher cost of services in our mobile phone business, and the increase in flight operations costs in the airline business.
Amid fears of a looming recession in the United States, rising commodity prices and surging oil prices, JG Summit remains bullish on the prospects of its businesses as it eyes an even “more substantial revenue and earnings growth.”
JG Summit intends to maintain a diversified portfolio of businesses with large and growing markets where it has sustainable competitive advantage, while looking for opportunities for new businesses.
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