GOKONGWEI-LED conglomerate JG Summit Holdings, Inc. is spending P48.2 billion ($960 million) this year to fund the expansion of its businesses including in petrochemicals.
Of the total amount, JG Summit is allocating about P18 billion to P20 billion for its airline business, Cebu Air, Inc.; P7 billion for its food unit Universal Robina Corp.; P15 billion for Robinsons Land Corp.; most of the remainder for its petrochemicals business JG Summit Petrochemical Corp.; and “a few hundred million” for its banking unit Robinsons Bank, President Lance Gokongwei said.
“[For petrochemicals], we’re preparing the invitations to bid so we expect, we are seeking clarifications now from vendors. We expect basically to award the major packages,” Gokongwei told reporters following the company’s annual stockholders’ meeting held late Tuesday.
“There are five projects here—one is expansion of our naphtha cracker, the second is expansion for the polypropylene plant, the third is a brand new polyethylene factory, the fourth is an aromatics factory, the fifth is a butadiene plant—so these five packages will be awarded to EPCs [engineering, procurement, and construction contractors] by the end of the year,” he added.
The conglomerate is allotting $700 million for the petrochemicals business, with the new projects targeted to be operational by 2021.
According to Gokongwei, the expansion would increase the naphtha capacity by 50 percent. “We’re also increasing the polypropylene by 50 percent, and we’re putting in a new polyethylene, new butadiene, and new aromatics factory,” he said.
“For polymers, we would say [the output will be]about 70 percent domestic, 30 percent export, but for the aromatics and the butadiene, primarily I think it’s almost all export,” he added.
Funding for the expansion will be sourced from free cash flow of the existing petrochemicals business as well as from borrowings.
Gokongwei also said its banking arm, Robinsons Bank, will be one of the areas of focus of the company.
“We invited a new management team to lead the bank since about two years ago. Together, we developed a plan to 2022 to really look at increasing our market share and become an important and relevant player in the banking industry,” he said.
“We’ve increased the capitalization of the bank to over P12 billion and right now, we have been focusing on building our management team, our technology, our branch network and you can see we are beginning to move up the rankings in terms of asset size,” he added.
“In terms of capitalization, I think we are the best capitalized banker relative to assets in the industry and we have a sufficient capital to support growth.”
Robinsons Bank is targeting to be one of the top 15 banks in the Philippines in the next two to three years.
JG Summit Holdings is one of the largest conglomerates in the Philippines and it is led by tycoon John Gokongwei, Jr.