JG Summit allocates P70B for business expansion

JG Summit Holdings Inc., the flagship company of the Gokongwei Group, is setting aside nearly P70 billion this year and next year for the continued expansion of its food, property, telecommunications, airlines and petrochemicals businesses.

JG Summit president Lance Gokongwei said the programmed capital budget is quite signicant because the group is determined to further build its businesses to improve profitability.

Of the total capital budget, $300 million will be used to bankroll the continued expansion of the group’s wireless business which has gained a niche in the lucrative telecommunications market by offering unlimited calls and text messaging for its subscribers.

Digitel Mobile Philippines’ Sun Cellular set off the price war when it launched in October last year its "24/7" subscription plan, which allowed subscribers to call and send text messages within its network without limit at prices of P250 for 30 days and P100 for P10 days.

The prices of "24/7" are now P350 for 30 days and P100 for seven days. Sun Cellular also offers unlimited text messaging for P50 for seven days and P150 for 30 days.

As for Robinsons Land Corp., JG Summit has earmarked between P3 billion and P4 billion for the construction of new malls, mixed-use complexes, high-rise buildings, and middle-to-upscale residential subdivisions. Other funds will be used for the refurbishment of the Cebu Midtown Hotel.

RLC group general manager and executive vice-president Frederick Go said the company will be building two to three new commercial centers every year. The company is targeting to have at least 30 shopping malls throughout the country by 2010. As of March this year, RLC has a total mall network of 18.

For this year, the company plans to expand its malls in Lipa, Batangas and Dasmariñas, Cavite.

The company currently has five malls operating in Metro Manila, namely, Robinsons Galleria in Ortigas, Robinsons Place Ermita, Robinsons Place Novaliches, Robinsons Metro East in Pasig City, and Robinsons Place-Pioneer. The remaining 13 malls are located in various parts of Cavite, Laguna, Pampanga, Cebu City, Iloilo City, Cagayan de Oro and Bacolod.

"We will pursue new retail formats to bring in foot traffic into our malls," Go said.

Gokongwei said the group is spending P3 billion this year for the continued expansion of its core branded food business as it aims to be a regional powerhouse in the snacks, candies, wafer, biscuit and chocolate markets.

As for its airlines business, the group needs between $300 million and $400 million for the purchase of new aircraft. Cebu Air is aiming to dislodge Philippine Airlines as the top airlines in the country.

Cebu Air is currently the second largest airline in the Philippines offering domestic flights to and from major cities in the country and international flights from Manila and Cebu to destinations in Asia. It claims a 38-percent market share.

It also flies to Hong Kong, South Korea and two other destinations in China.

Gokongwei said the group will invest an additional $450 million in the next three to four years to build its petrochemicals business.

Gokongwei said the group expects to sustain its growth this year with most of its businesses posting an improvement in their financial performance.

"We expect to do reasonably well. We have a lot of exciting things going on. Our businesses are well positioned. URC is doing very well in the international market. Digitel is gaining ground. It has made quite an impact in the wireless segment and our airlines is growing," Gokongwei said.

He said food and real estate operations will continue to be the group’s major source of income.