The net debt of JG Summit Holdings Inc. is seen to almost double in the second quarter after it absorbs the financial obligations of subsidiary JG Summit Olefins Corporation (JGSOC) which has shut down its petrochemical plant.

“This alters our net asset value computation because parent net debt will balloon,” said Abacus Securities Corporation.

The brokerage showed a chart that places the estimated debt level of JG Summit at ₱164.5 billion in the second quarter of 2025 (after absorption of JGSOC debts) from ₱87.7 billion in the first quarter of this year.

“We sough clarification on this but have yet to get a response. The move is probably being taken to make JGSOC more attractive to potential buyers. This is not what we envisioned when we suggested that management would be better off selling the unit,” Abacus noted.

It added that, “While a sale may go through, JGS would be saddled with much more debt, meaning much of the negative drag from JGSOC will remain.”

During the firm’s annual stockholders’ meeting, JG Summit President and CEO Lance Y. Gokongwei said “we have proactively transferred all of JG Summit Olefins’ debts to the parent company, JG Summit Holdings.

“All these actions enable us to focus on preserving our assets in Batangas and on evaluating various strategic options for the business, while ensuring that all our obligations to our creditors are met.”

He noted that, “We have stopped production in our petrochemical business since January of 2025 as approved by the JG summit board. The petrochemical plan will remain on a prolonged shutdown for at least two years.

“Given persistent challenges in the global petrochemical space, JG summit Olefins Corporation will also implement a manpower rationalization in accordance with all applicable laws and regulations.

“In light of this, we have instituted an employee care program to aid affected individuals in this transition.”

Gokongwei said “we are confident that the decision to shut down our petrochemical plant will help improve the group's overall consolidated results compared to the previous year.”

This is as cheaper oil prices, a stronger peso, lower interest rates, and easing inflation “all bode well for our businesses.”

The firm is optimistic that its revenues and core earnings will continue to improve this year although shutdown costs of its petrochemical plant took a sizeable bite out of profits.

“We are hopeful that the encouraging trends we are seeing in improving consumer sentiment brought about by the tempering inflation coupled with the favorable forex and oil prices will help accelerate demand and translate to better topline growth and improving margins for the balance of the year,” said Gokongwei.

He noted that, “We continue to build on the momentum brought about by the strategic interventions we have implemented in the second half of last year.

“This is evident across our core units in food, with its branded consumer foods business posting double digit volume growth, and airline, with strong passenger and cargo volumes in the recently concluded quarter.”

Gokongwei also cited that “Our new businesses in logistics and airport operations are now profit generating while we are seeing a very good trajectory for our digital bank to break-even in the near term.”