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BMI View: The Philippines' development of olefins and polymer resins
production will overcome the main weakness in its petrochemicals industry, which
has been dependent on imported ethylene and propylene, as well as aromatics and
their derivatives. JG Summit Holdings' petrochemicals complex has only modest
capacity but ensures that the Philippine petrochemicals industry will have a
future, with potential for further investment and diversification.
The petrochemicals industry witnessed a downturn in output revenue in Q116 with
the value of basic chemicals output falling 15% y-o-y and rubber declining
11.6%, although plastics grew 1.3%. Much of this loss was due to a decline in
prices. While chemicals output volume was up 83% y-o-y according to official
statistics, it was down 43% compared to the previous quarter. Plastic and rubber
volumes grew 14.3% y-oy, indicating that output was holding up even as prices
JG Summit posted 38.1% growth in core net profit to PHP28.05bn in 2015 with its
airline and petrochemical businesses contributing to its earnings. Consolidated
revenues went up by 24.1% to PHP229.27bn while cash flow as measured by earnings
before interest, taxes, depreciation and amortization (EBITDA) rose by 29.6% to
PHP63.79bn. New petrochemicals operations that opened in November 2014 ensured
that the JG Summit Petrochemicals Group subsidiary reported PHP26.78bn in
revenue, compared to PHP3.23bn in 2014.