JG Summit hikes 2014 capex to P44 B

MANILA, Philippines - JG Summit Holdings Inc. is increasing its capital spending by nearly a quarter to P44 billion this year to support key initiatives of its operating units.

Core earnings of the conglomerate are projected to grow by double-digit this year on the back of continued expansion of its property, snacks and petrochemical businesses, and higher dividend income from investments in power generation and telecommunications, its top executive said.

JG Summit president and chief operating officer Lance Y. Gokongwei said the P44.2-billion capital spending will drive the growth of the company this year. The amount was 23 percent higher than the P35.9 billion spent in 2013.

Of the total, P16 billion will go to Robinsons Land Corp. (RLC), P14.1 billion for budget carrier Cebu Air Inc., P9 billion for snacks and beverage giant Universal Robina Corp. (URC), P5 billion for JG Summit Petrochemicals Corp. and P100 million for Robinsons Bank Corp.

“The economy is growing very well and we’d like to participate in that (through) food, property, chemicals, bank and airline,” Gokongwei said.

In particular, URC will commission a creamer factory in Vietnam and a bioethanol facility in the Philippines. It will also complete the construction of a factory in central Vietnam while improving its selling systems in Indonesia and Thailand.

RLC, for its part, has opened five malls in fiscal year  ending September 2014 while two more are in the construction stage. It will also launch P6 billion to P8 billion worth of projects for its residential division.

Cebu Air, the operator of Cebu Pacific, will increase its routes as it takes the delivery of several new fuel-efficient aircraft.

The petrochemical business is commissioning its naphtha cracker plant, which will bring in $800 million to $1 billion in revenues annually during full operations, Gokongwei said.

For this year, Gokongwei said the company expects a double-digit growth in core net income. In 2013, JG Summit’s core net income, which discounts non-recurring items, climbed 22 percent to P13.4 billion from P11 billion a year ago.

Earnings of JG Summit will also be boosted by dividend income from the recently-acquired 27-percent share in power distribution giant Manila Electric Co. (Meralco).

“This year, we expect P11.5 billion to P12 billion dividend income due to increased dividends from Meralco and subsidiaries that have increased their dividend rates,” Gokongwei said. JG Summit also earns dividends from Singapore-based United Industrial Corp. Ltd. and dominant carrier PLDT.

Gokongwei said JG Summit is happy with its eight business units but it will continue to take advantage of opportunities that will arise.

In the first quarter, JG Summit’s core net income, which excludes one-off gains and losses from foreign exchange, market valuations, derivative transactions and extraordinary items, rose 12.1 percent to P5.33 billion from P4.76 billion.

Consolidated net income attributable to equity holders of the parent firm inched up to P4.88 billion from P4.86 billion a year given P215 million in extraordinary losses due to Typhoon Yolanda.