JG Summit net profit plunges 90%
MANILA, Philippines - The weakening of the Philippine peso weighed hard on the second quarter and first half earnings of conglomerate JG Summit Holdings Inc.
In a regulatory filing, the flagship holding firm of tycoon John Gokongwei said its net income attributable to equity holders of the parent firm sank nearly 90 percent to P310.79 million in the second quarter compared with P2.56 billion a year ago.
Total revenues, which came from food, airline, real estate, petrochemicals and banking businesses, rose 9.45 percent to P36.97 billion in the April to June period from P33.77 billion.
However, JG Summit incurred P2.87 billion in foreign exchange losses and P365 million market valuation losses in the second quarter, reversing the P2.87 billion and P557 million income a year ago, respectively.
For the first semester, the conglomerate’s profits fell to P5.17 billion from P7.47 billion year-on-year.
“The 30.8-percent decrease is mainly due to the depreciation of peso during the period as the company recorded a P2.97-billion foreign exchange loss compared to a foreign exchange gain of P1.30 billion for the same period last year,” JG Summit said.
Core earnings before tax, which strips off non-recurring items like foreign exchange fluctuations, jumped 31.7 percent to P13 billion in the first half from P9.87 billion last year.
In the first half, consolidated revenues gained 8.9 percent to P75.4 billion from P69.23 billion “due to the strong performance of all business units, except for our Petrochemical business,” JG Summit said.
JG Summit also benefited from a slower growth of cost of sales and services, which inched up 2.6 percent to P49.27 billion, which is relatively lower than the revenue growth.
JG Summit said the tempered uptick in costs were because “aviation fuel expenses incurred by our airline business only increased 2.2 percent due to lower average fuel rate in 2013, a 20-percent drop in the bank’s interest expense due to lower average interest rates and lower production of petrochemicals.”