JG Summit Holdings Inc. of the Gokongwei Group said Monday it is injecting an additional P11 billion in fresh capital into its wholly-owned petrochemical subsidiary.
JG Summit said its board of directors approved the proposed P11-billion infusion into JG Summit Olefins Corp. (JGSOC) to pay off its expansion project obligations and support its operations during a period of declining market demand and rising input costs.
JGSOC, in exchange for the capital infusion, will issue 1.67 billion shares to JG Summit, equivalent to 20 percent of the company’s outstanding common shares, at P6.57 apiece.
JGSOC 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 Philippines to produce olefin raw materials ethylene and propylene used as feedstock by the downstream polymer plants, which produce many products including plastic, clothing and fiberglass.
It is embarking on an organization-wide transformation that targets realizable performance results within 2024.
JGSOC narrowed its net loss to P8.8 billion in the first nine months of 2023 even as revenues remained largely flat year-on-year at P25.5 billion as increased volumes, especially in third quarter after its cracking operations resumed in June, cushioned the impact of lower petrochemical selling prices.
Revenues in the third quarter jumped by 106 percent to 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, also helped boost the company’s operations.
JG Summit, aside from its petrochemical business, also has investments in property development, airline transportation, food manufacturing and infrastructure.