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JG Summit sets bigger $1-B budget

Posted on June 27, 2013 11:03:44 PM [ BusinessWorld Online ]
JG SUMMIT Holdings, Inc. plans to spend a little over $1 billion this year, bulk of which will go to its property and petrochemical subsidiaries, a top official of the conglomerate said yesterday.
“Capex (capital expenditure) in 2013 is budgeted to reach over $1 billion,” Lance Y. Gokongwei, JG Summit president and chief operating officer, said in his report at the company’s annual stockholders’ meeting in Quezon City.
This year’s $1.033-billion capex is 11.56% more than the $926 million actually spent last year.
The company’s real estate arm, Robinsons Land Corp., is getting bulk of the budget with $320 million; JG Summit Petrochemical Corp. will have $300 million; airline unit Cebu Air, Inc., will get $275 million; food and beverage subsidiary Universal Robina Corp. will be allocated $120 million; while Robinsons Bank Corp. will get $18 million.
Robinsons Land also got the biggest allocation from last year’s capex with $276 million; followed by JG Summit Petrochemical with $261 million; Cebu Air with $255 million; Universal Robina with $125 million; and Robinsons Bank, $9 million.
Mr. Gokongwei said Robinsons Land’s capex will be used “for the construction of four new malls, two office buildings, three Go Hotels and for the completion of eight residential projects.”
JG Summit Petrochemical’s budget, meanwhile, will be used for the completion of its naphtha cracker facility in Batangas while Cebu Air’s capex will be used for the acquisition of additional five Airbus A320s this year, he said.
Mr. Gokongwei told stockholders the company is upbeat on its petrochemical business.
“Your company is at the forefront of the resurgence of the Philippine manufacturing sector, which we believe will be a key driver of the economy going forward,” he said. “With petrochemical products as one of the most basic raw materials for the manufacturing industry, JG Summit will have the ability to supply most of the growing needs of resurgent manufacturing sector.”
Mr. Gokongwei said JG Summit is on track for the opening of its $800-million naphtha cracker facility by the first quarter of next year. Mr. Gokongwei last year said the company expects up to $1 billion in revenues annually from the production of resins, polyethylene and polypropylene, which are raw materials for plastic products.
JG Summit is also keen to participate in the government’s flagship infrastructure program, particularly in the airport projects.
“We are likewise keen to participate in the development of the infrastructure backbone of the country via PPP (public-private partnership) projects that are being promoted and bid out by the government,” Mr. Gokongwei said.
“We are particularly keen about the development of airport terminals because we believe in supporting the tourism drive of the government.”
JG Summit’s tie-up with Metro Pacific Investments Corp. (MPIC) is one of the seven consortia that were prequalified to bid for the P17.-5 billion PPP project to expand and operate Mactan-Cebu International Airport this August.
Speaking to reporters after the stockholders’ meeting, Mr. Gokongwei said JG Summit will team up with MPIC for all airport projects the government plans to offer. The government is looking to bid out the expansion Bohol and Puerto Princesa international airports, among other similar facilities.
Meanwhile, Mr. Gokongwei said proceeds of the planned initial public offering (IPO) of Robinsons Retail Group will be used “for expansion of stores and acquisition.”
Robinsons Retail Group’s portfolio covers Robinsons Supermarket, Robinsons Department Store, hardware shop Handyman, Robinsons Appliances, True Value, Topshop, Topman, Dorothy Perkins, Warehouse, Ben Sherman, Toys “R” Us, Saizen, Howards Storage World and Ministop, according to the Gokongwei Group’s Web site.
Mr. Gokongwei said the IPO will take place “depending on the market,” adding he could not say how much the company is looking to raise from the share sale.
He added that Robinsons Retail Group will not be folded into JG Summit.
The company’s net income grew 2.57% to P6.79 billion in the first quarter from P6.62 billion a year ago. Net income attributable to equity holders of the parent company dipped by 1.02% to P4.86 billion from P4.91 billion last year. Revenues jumped 8.38% to P38.43 billion from P35.46 billion, while cost of sales and service edged up 2.86% to P24.45 million from P23.77 billion.
Its shares gained 95 centavos or 2.46% to close at P39.55 yesterday from P38.60 each last Wednesday. -- Cliff Harvey C. Venzon
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