Three years on from the pandemic’s outbreak, JG Summit’s petrochemical unit remains a stubborn challenge for ultra bilyonaryo Lance Gokongwei, who has yet to find a way to turn around its tanking fortunes.
JG Summit Olefins Corp. (JGSOC) has announced a startling loss of P14.9 billion for 2022, a figure almost four times higher than the P4.1 billion loss the company experienced in both 2020 and 2021.
This is worse than JG’s previous loss leader, Cebu Pacific, which lost by only P14 billion in 2022 (on 261 percent growth in revenues to P56.8 billion) after cratering a whopping P24 billion in 2021. (Gokongwei has relinquished his executive duties in Cebu Pacific starting this year).
In its annual report, Gokongwei blamed JSOC’s poor sales to the lingering impact of the pandemic on the global economy and closure of China’s (a major buyer of petrochemicals) border.
With surging prices of the raw materials and the cost of shipping, Gokongwei said “JGSOC strategically implemented a three-month facility shutdown in mid-2022 along with other petrochemical players in the region.”
By collectively shutting down their facilities, JGSOC and other players in the region aimed to reduce the supply of petrochemicals on the market, which would help to increase the price and erase what Gokongwei called “negative petrochemical spreads.”
Nearly half of JGSOC’s losses were due to rising interest expenses and mounting foreign exchange losses.
Despite the losses, Gokongwei remains optimistic on petrochemicals as he poured P5 billion in new investments poured into the business last year after finally getting a three-year tariff cover against rival imports under the newly-installed Marcos administration.
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