The Perfect Storm
2018 has been a perfect storm for JG Summit Holdings, Inc. as the firm survived the year’s high inflation, steep competition, high oil prices, and weaker peso. And despite calling it a perfect storm, the company didn’t avoid generating losses which accumulated to 35% compared to its earnings last 2017. Is it something that investors should be worried about? Does it make the firm less worthy? Given the situation faced by JG Summit, investors should also consider the factors which affected the sector in general. As what Mr. Gokongwei stated, the firm has the ability to bounce back this 2019.
Catch me in my live training events! (quick plug)
The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.
Stock Smarts Cebu — April 6 & 7, 2019
Investing Insights Japan – April 13, 2019
Stock Smarts Singapore — May 18 & 19, 2019
Investment Conference 2019 – May 25, 2019
Stock Smarts Manila — June 15, 16, 22, 23, & 29, 2019
Stock Smarts Iloilo – July 6 & 7, 2019
Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019
Stock Smarts UAE – August 30 – September 3, 2019
Stock Smarts Qatar — October 3 – 6, 2019
Stock Smarts Taiwan – November 2, 2019
Consolidated Revenues and Net Income
During 2018, JG Summit recognized an increase in consolidated revenues by 6.8% or P291.92 billion in figures. This is due to the strong sales coming from the different segments of the firm including Robinsons Land Corporation, Cebu Pacific, and Robinsons Bank. As the revenue increased, the firm’s cost of sales and operating expenses took a jump as well, accounting to 13% higher or P193.59 billion and 5.8% or P53.06 billion respectively. This caused the net income attributable to equity holders of the parent decrease to P19.18 billion which is lower compared to the P29.36 billion last 2017. The weaker Philippine peso against US dollar is also a major factor affecting the earnings of the company.
Cebu Pacific and URC
The finance costs of JG Summit also got higher by 20% to P9.63 billion because of the increase in financial debts of the parent company and its airline segments. The growth of the trust receipts of its petrochemical business also affected its performance. Amid this losses, its URC business unit generated a 2% revenue to P127.67 billion but the again reported a decrease in net income to P9.2 billion because of the higher level of distribution costs in terms of coffee, flour, feeds, and farms products division. On the other hand, Cebu Air had an increase in revenue by 9% to P74.11 this 2018 but a decrease in net income by 50% because of the weaker peso and high fuel prices.
RLC and Robinsons Bank
Despite the reported decrease in net income, both Robinsons Land Corporation (RLC) and Robinsons Bank made lift in terms of revenues and net income. As for RLC, it reported a consolidated revenue of P29.44 billion, followed by a 40% increase in its net income that accounted for P8.23 billion. The solid sales of RLC came from the demands of office and residential spaces, and malls. Meanwhile, Robinsons Bank’s revenue went up by 37% to P6.13 billion and net income by 3.4% to P317.68 million.
