JG Summit allots record $1.03 B for capex

MANILA, Philippines - Tycoon John Gokongwei’s investment vehicle JG Summit Holdings Inc. is jacking up its capital spending to a record $1.03 billion this year to support the expansion program of its operating units.

Bulk of the capital expenditures would be taken up by property unit Robinsons Land Corp. (RLC) to take advantage of the property boom.

“Capital spending for 2013 is budgeted to reach over $1 billion with RLC accounting for the biggest share of 31 percent or $320 million,” JG Summit president and chief operating officer Lance Y. Gokongwei said during the company’s annual stockholders meeting.

Gokongwei said it would be the largest capital spending of JG Summit thus far. Last year, the conglomerate spent $926 million for the expansion program of its subsidiaries.

Gokongwei said RLC would build four new shopping malls, two office buildings and three Go Hotels. It would also support the completion of at least eight condominium buildings.

Airline firm Cebu Air Inc., which owns and operates budget carrier Cebu Pacific, would take up $275 million for the acquisition of five new Airbus aircraft as it lines up new routes.

Snacks and beverage giant Universal Robina Corp. would spend $120 million while JG Summit Petrochemicals Corp. is backed by $300 million in capital.

“We are gaining traction for our food products in other countries such as Malaysia, Singapore, China, Hong Kong and Indonesia,” Gokongwei said.

JG Summit would start commissioning its naphtha cracker plant late this year and commercial operations early in 2014.

“The revival of the manufacturing sector is believed to be the key growth driver of the Philippine economy,” Gokongwei said, adding that petrochemicals products are one of the basic raw materials in the manufacturing industry.

Gokongwei said Robinsons Bank Corp. is alloting $18 million this year for its capex. The lender has a license to open 31 new branches in eight restricted areas in Metro Manila in the next three years.

The company declared yesterday an 18-centavo per share cash dividend to stockholders as of July 17, payable on Aug. 12.

In the first quarter, a steep drop in the performance of the petrochemical business weighed down profits of JG Summit.

Net income from equity holders of the parent slightly dropped to P4.86 billion from P4.91 billion in first quarter of 2012. Revenues of the holding firm rose 8.4 percent to P38.43 billion from P35.46 billion.

For infrastructures, Gokongwei said the company has the skill set to join various public-private partnership auctions.

JG Summit and Pangilinan-led Metro Pacific Investments Corp. has formed a joint venture company to formalize their tie-up for expansion and operation of the P17.5-billion Mactan Cebu International Airport project.