The future just got bleaker for JG Summit Olefins (JGSO) of ultra bilyonaryo Lance Gokongwei which has piled up P6.2 billion in losses since 2020.
In Department Administrative Order No. 22-05 Series of 2022 issued on June 3, Trade Secretary Ramon Lopez, dismissed the petition of JGSO to impose safeguard or tariff measures on imports of linear low density polyethylene pellets and granules (LLDPE).
JGSO is the only local producer of LLDP which is used to produce packaging material for food and consumer products.
Lopez adopted the stand of the Tariff Commission which ruled that JGSO has no basis for its plea for protection because the volume of imported LLDPE pellets and granules from 2015 to 2021 have not “both in absolute and relative terms to domestic production.”
The ruling is a major blow to JGSO which posted a net loss of P2 billion in 2020 and P2.1 billion in 2021. Its bottomline got worse as it booked P2.1 billion loss in just the first three months of 2022.
While sales have nearly doubled in 2021, higher interest expenses and mounting foreign exchange losses have dragged JGSO deeper into red territory.
JGSO, which opened the country’s first naphtha cracker in 2014, has just completed its $1.1 billion expansion project in 2021. Gokongwei merged JGSO with JG Summit Petrochemical starting this year.