Coming from a very strong 2019, COVID-19 has clearly disrupted the business which dented our 2020 operating and financial results. Nonetheless, our diversified portfolio of market-leading businesses coupled with the strength of our balance sheet helped us navigate the situation.
The pandemic has further accelerated our multi-year transformation program that we laid out even prior to COVID-19. Most important of which is our thrust on digitalization & customer centricity that enabled us to quickly adapt our business model to the changing customer landscape. With our long-term view, we will continue to invest in the necessary assets & capabilities needed to sustain the business in the years to come. This will allow us to take advantage of emerging opportunities as the economy pivots back to growth.
As we cautiously embark on this challenging path to recovery (with COVID-19 still in the picture), our utmost priority is the health and welfare of our employees. Aligned with our purpose, we will also continue to provide better choices and the best value for our customers while ensuring business continuity and the exercise of prudence in liquidity and cost management. We will also support the government and the communities where we operate in as the vaccination program is rolled out. This is a necessary must to jumpstart the economy towards the new normal.
Our company, which remains to be one of the largest and highly-diversified conglomerates in the Philippines, ended 2020 with a core net income after taxes of Php450 million reinforced by our resilient portfolio and the group’s agile response to the disruption caused by the COVID-19 pandemic.
The double-digit revenue growth in our banking and office segments, robust sales in food, and higher dividends from our telecommunications investment tempered the negative impact of the pandemic on the company’s overall operating results.
Our petrochemical unit saw lower sales volumes and selling prices on the back of weaker global industrial demand while our air transport business was severely impacted by flight restrictions particularly in the onset of the ECQ. Equity earnings from our core investments in Meralco (MER), Global Business Power Corporation (GBPC), and United Industrial Corporation (now called Singapore Land Group Limited), also declined year-on-year (YoY). Thus, JG Summit’s consolidated revenues for the full year ending December 31, 2020 (FY20) amounted to Php221.6 billion, 27% lower vs the same period last year (SPLY).
The strong margin expansion in our food and banking units also provided some buffer to offset profit declines in other businesses. Incorporating non-recurring fuel hedging losses and a one-off impairment charge from MER led JGS to report a consolidated net loss of Php468 million.
Our company’s robust balance sheet provides the group enough ammunition to weather this challenging environment. Consolidated gearing and net debt-to-equity ratios stood at 0.78 and 0.60, respectively, as of end-2020. We also successfully closed a 10-year US$600-million offshore bond issuance in July 2020 with a record low interest rate of 4.125% per annum, which upholds JGS’ credibility in the capital markets. Moreover, we further strengthened the company’s capitalization by issuing 5% stock dividends last October 2020.
We are now living in an extraordinary period given the COVID-19 disruption. It is imperative the group remains focused on the following four key areas: employee health and safety, operations and supply chain continuity of our key businesses, implementing measures to manage cash, costs and liquidity, and helping the communities.
We fully recognize that no organization can exist without its people. Our people are central to all the processes in our organization - from creating our strategies to operationalizing these into everyday realities. We can only succeed through the collective and individual contributions of our people.
Despite the strict lockdown during the first two quarters of 2020, our key businesses remained operational and determined their key immediate priorities to address the needs of our consumers.
We implemented austerity measures to focus spending on necessary operating and capital expenditures needed to sustain our current operations.
We continue to implement community-related programs to support our communities and help the government.
The situation has driven us to review our current business and operating models to adapt to the new normal as we predict shifts in the way consumers buy/use our products and services. We are also now in the process of accelerating our digital transformation to further deliver value and improve customer experience, as well as to provide a digital workplace for our employees.
While we have yet to see the end of this crisis, I am optimistic that we can all weather this storm because it is clear to us why we exist, who we are, and what we need to do to emerge even stronger. In last year’s annual report, I communicated that we have established OGSM as our new Strategic Planning Framework which stands for Objectives, Goals, Strategies, and Measures. As part of this exercise, we crafted JGS’ new Purpose, Values, and Ambition (PVA). In 2020, we proactively articulated these within our organization to inspire and guide our people amidst this unprecedented period.
JG Summit has unrelenting commitment to provide for our customers with better choices, creating shared success with our stakeholders.
A passionate, highly determined and resilient attitude towards enabling possibilities, creating new and disruptive business models, product offerings and innovations.
The individuals, families or groups whose lives we aspire to make better.
Providing innovative products and services that are more affordable, accessible, and convenient.
We only truly succeed if others succeed with us.
We provide stable livelihood, nurturing work environment and opportunities for career and professional growth, enabling them to provide for and raise their families well.
We enable the growth and progress of the communities where we operate, through the livelihood we create and the development of the local economy.
In our quest for growth, we bring along our partners and enable them to create value for their own businesses.
We provide the owners – family or the public – with wealth, financial freedom, and the opportunity to elevate their lifestyles in meaningful ways.
We exist, first and foremost, for our customers. We want to make their lives better by providing them with better choices through our wide range of products and services. And as we do this, we can only truly succeed if we are able to share our success with our various stakeholders – our employees, suppliers, communities, and shareholders.
Our core values of Entrepreneurial Mindset, Integrity, and Stewardship empower us to get our work done the best way we can, make the right decisions, and build our future better. We have also set our ambition and goals for the next five years. Our vision to solidify JGS’ position among the largest conglomerates in the Philippines remains intact.
We strive for growth with a resilient, passionate, and agile mindset with a focus on living out our purpose to provide our customers with better choices.
We will act with honor in all our undertakings and with all our stakeholders, upholding the principle of always doing the right thing because it is the right thing to do, even when no one else is watching.
We are fully responsible for the resources entrusted to us, be they financial, environmental, and people. We make sure that they are managed well and cared for, all with sustainability at the forefront.
Anchored on our PVA, our OGSM helps us translate our long-term strategies into actionable and measurable plans. It provides us focus, transparency, and alignment on what everyone in the organization - from the corporate- down to the individual-level - needs to do to contribute to the attainment of our Ambition. In the midst of all the disruption, our OGSM has become even more relevant, providing us with clarity and agility on how to quickly pivot to the new normal in order to seize new market opportunities.
The group has also been undergoing transformation even before the pandemic. Part of this process is ensuring that we have the right organizational structure to support our long-term strategies. Last year, we accelerated our enterprise transformation with respect to the corporate center organization design to shift its focus to business results delivery, ecosystem leverage, as well as business and organizational sustainability.
Consequently, we established appropriate governance structures by forming and redefining teams into committees and councils. For instance, we formed the Executive Leadership Council, composed of our corporate center and business unit heads to facilitate strategy discussions including the oversight and project governance of the group’s priority initiatives. The council further created a collaborative environment that allows for closer alignment, exchange of ideas, sharing of best practice and the leveraging of our group ecosystem to further create business value.
As we move to 2021, we believe that weaker consumer sentiment will continue to affect demand for products and services and as such, we remain cautiously optimistic. However, we will focus on the execution to build on and continue the momentum and green shoots that have started in the latter part of 2020. The prospects of a vaccine likewise give us hope that this will unlock further acceleration and recovery in the near term.
To our shareholders, board of directors, and customers, on behalf of JG Summit, I would like to thank you all for your continued trust and support for the group. And to my colleagues in JGS, I am truly grateful and humbled to lead this organization. I am proud of all your contributions and I look forward to the day when we could all look back to these events as just part of our passage to our stronger and better normal.
