JG Summit infuses P11 billion into petrochem unit

MANILA, Philippines — JG Summit Holdings Inc. is infusing P11 billion into its petrochemical business JG Summit Olefins Corp. (JGSOC).

JGSOC will use the funds to pay off its expansion project obligations and to support its operations at a time of declining market and rising input costs.

At present, JGSOC operates the Gokongwei Group’s naphtha cracker plant that produces products, such as polymer grade ethylene, polymer grade propylene, pyrolysis gasoline, mixed C4, pyrolysis fuel oil and other products and their by-products.

In a disclosure to the Philippine Stock Exchange (PSE), JG Summit said its board of directors has already approved the proposal to infuse the additional capital.

This infusion is primarily intended to pay off JGSOC’s maturing obligations and to support its operations.

In the nine-months to September, JGSOC incurred a net loss of P8.8 billion, even as revenues remained largely flat year-on-year at P25.5 billion.

Increased volumes, especially in the third quarter after its cracking operations resumed in June, cushioned the impact of lower petrochemical selling prices versus last year.

For the third quarter, the petrochemicals business posted a topline improvement of 106 percent at P11.2 billion, coming off a low base in 2022.

Disciplined cost control and production efficiencies along with positive margins for its relatively newer products – aromatics and butadiene – as well as LPG Trading under its subsidiary Peak Fuel Corp. offset the slight decline in topline.

As such, EBITDA improved to a P500 million billion loss in the third quarter, better than the P1.3 billion and P1.6 billion losses it registered in the second quarter, and third quarter of 2022, respectively.

Moving forward, JG Summit is embarking on an organization-wide transformation program that targets realizable performance results within 2024.

JG Summit, meanwhile, reported P15 billion in nine-month profits, a marked turnaround from the P900 million net loss incurred in the same period last year.