JG Summit infusing P5 billion into petrochem unit

MANILA, Philippines — Gokongwei-owned conglomerate JG Summit Holdings Inc. is infusing up to P5 billion into its wholly owned petrochemical subsidiary to help the company pay off its outstanding obligations resulting from its expansion projects.

The infusion would also help JG Summit Olefins Corp. continue with its operations amid declining market demand and rising input costs.

JG Summit Olefins is the largest manufacturer of polyolefins – commonly used in making plastic bags – in the country.

It operates the first and only naphtha cracker plant in the country, which produces the olefin raw materials ethylene and propylene used as feedstock by the downstream polymer plants, which produce many products including plastic, clothing and fiberglass.

In the nine months to September, JG Summit Olefins reported a four percent decline in revenues to P26.2 billion due to lower polymer sales.

This was cushioned by the fresh contributions from the sale of aromatics, butadiene, and LPG trading.

In May 2022, JG Summit Olefins strategically shut down its cracker and downstream polymers and extraction units given the weak demand for both domestic and export markets, especially with the sustained lockdowns in China and elevated freight costs.

These plants were subsequently restarted in August and September, although below full capacity, as supply-demand dynamics improved while remaining cautious with the lingering global recession sentiment.

EBITDA ended at negative P3.2 billion, as average naphtha costs surged 47 percent year-on-year and shutdown-related costs affected margins.

Higher depreciation, interest, and forex losses led JG Summit Olefins to post net losses of P9 billion during the nine-month period.