March 28, 2014

JGS posts 22% hike in 2013 net income

In its disclosure to the Exchange, JG Summit Holdings Inc (JGS) announced 2013 consolidated core net income of P13.4b, up 22% YoY, after excluding forex losses and mark-to-market gains. However, reported net income, including P4.1b in forex losses (vs. P1.4b in forex gains in 2012) and P309m (-83% YoY)in MTM gains, fell 26% YoY to P10.1b.
Consolidated EBITDA grew 16% YoY to P34.2b. Consolidated revenues went up 9% to P135.6b on strong performances by URC (revenues up 14%), RLC (+18%) and Cebu Air (+8%). Dividend income from core investments such as PLDT grew 4%. On the other hand, JG Petrochemicals posted a 79% decline in revenues given the technical shutdown last October in preparation for the completion and integration of its naphtha cracker plant that is due to start commercial operations this year.

Meanwhile, equitized earnings from UIC was at P2.28b, up 8% YoY. Operating expenses also went up 18% to P25.9b on higher expenses in the airline and food businesses. Interest and other charges were 18% higher on additional debt to partly finance the company’s capex and major investments last year including its acquisition of a 27% stake in Manila Electric Co (MER).

Our take: Barring any further increases in fuel and other operating costs in the airline business, we expect a brighter outlook for the company given the expansion across its businesses particularly in the food and property businesses, and the full-year earnings contribution from MER.

The resumption of the operations of the naphtha cracker plant will result in the back integration of JG Summit’s existing polyethylene (PE) and polypropylene (PP) facilities which have so far imported ethylene and propylene inputs, and is expected to contribute between US$800m-$1bn in turnover as per company estimates. – WealthSec