PRESIDENT AND CEO’S REPORT

As we navigate the ever-changing business landscape, we accelerate our progress by capitalizing on our vast ecosystem and the initiatives we have set to capture efficiencies and ensure sustainability in our operations.

Looking back at another year that has passed, we keep our focus on our commitment to provide our customers with products and services that give them better choices and create shared success with the stakeholders who continue to empower us along our journey towards progress.

Lance Y. Gokongwei

President and Chief Executive Officer

President and
CEO’s Report

Going beyond our post-pandemic recovery, our businesses continued to progress through the new normal. Travel demand boomed as we saw a full year of eased mobility, which propelled our airline back into profitability after the pandemic. Our real estate business also saw robust growth, especially as foot traffic in malls and hotel bookings improved. In addition, margin expansion in our real estate and food businesses offset the volatility we continued to see in fuel prices and the high inflation that affected consumer demand.

Aside from the performance of our business units, we also focused on advancing our strategies as well as managing our risks as a group. We embarked on a transformation project for JG Summit Olefins, preparing it for the turn of the prolonged trough in the global petrochemical cycle by capturing opportunities to improve performance. We also saw progress in what we started in 2022, with our digital bank, GoTyme, hitting significant milestones and Robinsons Bank’s merger with BPI already completed by the end of the year. Our sustainability journey also progressed with the first step of our Climate Resilience Project. With these advancements across the group, we hope to reshape the future as we continue our commitment to provide our customers with better choices and create shared success with our stakeholders.

2023 Performance

JG Summit completed the year with a 14% growth in revenues amounting to Php344.0 billion, owing to the strong recovery of our airline as we saw the increase in mobility both locally and globally. Coupled with better margins in our food and real estate businesses, this led to our core net income to more than tripling year-on-year to end at Php19.8 billion and our net income jumping to Php20.0 billion from Php651 million, despite the absence of the gain we saw from our sale of Meralco shares in 2022 and the extended plant shutdown for JG Summit Olefins we had in the first half of 2023.

The group also continued to have a solid financial position that enabled it to fuel expansion across our business units, with the consolidated debt-to-equity ratio improving to 0.68 at the end of 2023. At the parent level, we repaid our $750 million bond in early 2023, leading our long-term debt to fall 35% and the remaining blended term of our outstanding debt to shift to 4.6 years. We also received dividends totaling Php15.7 billion from some of our SBUs and core investments, augmenting our cash position and allowing us to infuse additional capital in JGSOC to support the business.

See our financials

FY Revenue

in Php billion
Total revenues continued to grow year-on-year.

Core Net Income

FY 2023
₱19.8B
+220% vs SPLY
Attributable to equity holders
of the parent

Debt-to-Equity Ratio

Key Performances of
Our Strategic Business Units

Revenue
in Php Billion
Attributable Core Net Income
in Php Billion
Revenue
in Php Billion
+6% vs SPLY

Growth rates tapered against a higher base in 2022, as well as a challenging macroeconomic backdrop and volume softness post-pricing actions

Attributable Core Net Income
in Php Billion
+4% vs SPLY

Operational and cost efficiencies led to better margins amidst challenged consumer demand

Revenue
in Php Billion
-10% vs SPLY

Domestic divisions, especially malls and hotels, saw robust growth, but Chengdu revenues recognized in 2022 led to a decline in 2023

Attributable Core Net Income
in Php Billion
+35% vs SPLY

Substantial margin expansion allowed net income to grow despite the fall in revenues

Revenue
in Php Billion
+60% vs SPLY

Strong travel demand propelled revenue growth with higher fares and better ancillary yields

Attributable Core Net Income
in Php Billion
₱12.5B improvement vs SPLY

Despite increased operations, operating expenses growth grew relatively slower with more efficient fuel consumption and favorable oil prices

Revenue
in Php Billion
+6% vs SPLY

Global petrochemical demand remained challenging, with higher volumes seen after cracking operations resumed in the middle of the year

Attributable Core Net Income
in Php Billion
₱0.9B improvement vs SPLY

New products from the newly completed plant expansion allowed us to narrow losses despite a prolonged shutdown in 2023

Accelerating our progress with BPI

The merger between the Bank of the Philippine Islands (BPI) and Robinsons Bank Corporation (RBank) obtained all regulatory approvals by the end of 2023. This is now in effect as of January 1, 2024, with integration underway. We look forward to further strengthening the partnership between Gokongwei and Ayala companies so we can continue offering better products and services to both BPI and RBank customers.

After the announcement of the agreement of the merger, we began to classify RBank as part of discontinued operations, contributing about Php552 million to JG Summit’s core net income. In addition, JG Summit began to receive dividends from RBank by virtue of the merger, amounting to Php0.6 bn in 2023. This will now be replaced by the dividend income JG Summit will receive as a shareholder of BPI moving forward.

Further supporting the value accretive nature of the merger for both parties is the appreciation of BPI’s share prices since the merger’s announcement. This shows the capital markets' belief that the merger will unlock various synergies across both groups to expand BPI’s client base and accelerate its growth to ultimately increase shareholder value.

Reshaping the future through digital banking

Our digital bank, GoTyme, also reached significant milestones in 2023. It surpassed the two-million customer mark and ending the year with ten billion pesos in deposits, progressing significantly faster than Tyme Bank’s experience in South Africa. We are delighted that our customers recognize the value we bring to the digital banking industry through our “phygital” approach, making the banking experience with GoTyme feel more genuine.

We look forward to opening more doors for unbanked and underbanked Filipinos in the future as we venture into providing more products and services.

Read more about GoTyme

Ensuring the sustainability of our businesses against climate risks

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After releasing our ESG targets in our 2022 report, we took the next step in our sustainability journey by digging deeper into our climate risks, understanding how these would impact our businesses, and creating measures to mitigate their effects. We began our Climate Resilience Project in 2023 by conducting facility-level analyses across our business units. In partnership with climate scientists, we assessed the inherent resilience of identified key assets and developed tailored risk mitigation strategies for these, serving as the first phase of the broader strategy we plan to extend to other critical facilities and assets. Through this project, we aim to ensure that our strategy against climate risks is actionable and can be applied throughout the group.

Our Climate Resilience Project is one of the proactive measures we’ve taken on sustainability as a group, which aligns with our long-term conglomerate-wide strategy, which includes non-financial goals in ESG. The achievement of which would come from leveraging on the group’s ecosystem to collaboratively implement valuable ESG initiatives and also collectively improve transparency. This puts us ahead of the release of new sustainability reporting regulations under IFRS S1 and S2 and guidelines of the Securities and Exchange Commission (SEC), empowering us to be better prepared for their implementation in the coming years.

Read more in our Sustainability Report

Closing Remarks

As we navigate the ever-changing business landscape, we accelerate our progress by capitalizing on our vast ecosystem and the initiatives we have set to capture efficiencies and ensure sustainability in our operations. We continue to the next phases of the portfolio moves we have undertaken in the past year. Our transformation project for JG Summit Olefins is underway and we hope to realize positive results soon. We are also working with BPI to ensure a smooth integration of Robinsons Bank clients into their system post-merger. GoTyme will be launching credit products in the coming months to serve its customers in more ways. On the Climate Resilience Project, we will implement the analysis we have already done on key assets in the other facilities across our businesses in various regions. These, alongside our other sustainability, agile, and digital transformation initiatives will help us reshape the future to meet the evolving needs of our customers.

Looking back at another year that has passed, we keep our focus on our commitment to provide our customers with products and services that give them better choices and create shared success with the stakeholders who continue to empower us along our journey towards progress. I am grateful to everyone for their contributions, which enable us to accelerate our progress and reshape the future.

Lance Y. Gokongwei

President and Chief Executive Officer