“We continue to focus on our purpose as we create meaningful breakthroughs as a conglomerate.”
This fuels our passion to keep our business agile and sustainable so we can look forward to the progress we will make in the many years to come.
James L. Go
Throughout 2022, we at JG Summit continued to work on solidifying our position as one of the Philippines’ largest conglomerates. Our topline improvement in most businesses reflected the growing demand for our products and services alongside the reopening economy, mitigating the impact of surging input costs on our margins. Despite record-high oil prices that drove up inflation and operating costs, we ended the year with good progress. With the help of our agile transformation and ESG initiatives, JG Summit has remained true to its purpose and commitment to offering better choices to its customers and creating shared success for its stakeholders.
As mobility improved in the Philippines and as travel restrictions eased throughout Southeast Asia in 2022, JG Summit saw a strong recovery from the devastating effects of the pandemic in previous years. Locally, the gradual resumption of face-to-face classes and on-site work boosted consumption and drove traffic back into the physical world. The reopening of international borders allowed us to travel freely, rejuvenating the airline and hospitality sectors. Both overseas Filipinos and foreign visitors began to fly back to the Philippines, reviving the local tourist scene as well. All these can be seen in the country’s 2022 real GDP growth of 7.6% versus 5.7% in 2021, indicating robust demand and healthy economic activity even with elevated inflation.
That said, our businesses still battled headwinds in 2022 that intensified from the previous year. Geopolitical pressures continued, leading to unprecedented fuel prices in the first half of the year. This primarily affected our air transport and petrochemicals businesses, putting downward pressure on profit margins and holding back their bottom-line improvement. The prices of goods also steeply rose throughout the year, consistent with how inflation rates trended from 3.1% for December 2021 to a 5-year high of 8.1% in December 2022. Foreign exchange rates also played a factor in increasing our costs of imported raw materials and fuel.
Unprecedented rise in fuel prices and inflation rates in 2022
Despite the odds, we can gladly say that we have weathered the storms brought on by 2022, with the help of our agile response and accelerated sustainability initiatives. These made operations more efficient and helped us further innovate our products. Utilizing the Agile at Scale methodology gave us the ability to build and refine our projects with feedback based on cumulative outcomes along the way, allowing us to create better offerings more quickly. We have also progressed on our ESG journey by setting targets that we want to reach as a group. Because of these, we are equipped to face 2023 and the years to come with the foundation we set at JG Summit, empowering us to continue improving the lives of our customers and stakeholders. This is the passion that drives us, and the commitment that we hope to pass on to future generations.
Driving Our Passion
With our passion to embed sustainability at the core of our business, we continued to move forward on our sustainability journey. From developing our sustainability framework and optimizing core processes, we are now on the path of acceleration as we strengthen the collaboration of our businesses.
Throughout the year, our leaders across the group completed an INSEAD master class on Sustainability and the South Pole Climate Leadership series. Both of these further equipped our top executives and teams to better reinforce sustainability practices in our
strategies and adopt best-in-class disclosure practices aligned with the TCFD framework. The four-part Climate Leadership series contained discussions on climate risks and opportunities, and how we can develop and implement our Climate Mitigation Roadmap. It also deepened our understanding of our greenhouse gas (GHG) footprint, reduction initiatives, and opportunities in the Carbon Market. As a result, we enhanced our reporting tools and strengthened our capabilities to meet information requirements that will benefit our key stakeholders, including the developments of our ESG targets and commitments.
As we march onward this 2023, we acknowledge the uncertainty of the future and the looming global recession, coupled with rising borrowing rates that are expected to be felt by consumers in the coming months. We continue working toward future-proofing our business and building our resilience against unforeseen circumstances. At the same time, we remain hopeful about the continued growth of JG Summit, considering the positive results from increased mobility, resumption of face-to-face classes, a growing manufacturing sector, and lower income tax rates for the middle class throughout the year. Additionally, the outlook for the Philippines’ economic indicators is encouraging—seeing the stabilization of foreign exchange rates and decelerating inflation, alongside the lowering of crude oil prices after its peak last June.
We are also excited about forging a strong partnership with the Ayala Group in the banking sector. The merger between the Bank of the Philippine Islands and Robinsons Bank is targeted to be completed by the start of 2024. This will hopefully open up new opportunities between the two conglomerates, giving us the ability to leverage each other’s strengths.
Finally, we remain cautiously optimistic knowing the terrific work that our employees have done on our Agile Transformation and Sustainability journeys will help us conquer the challenges we may face in the future.
We continue to focus on our purpose—an unrelenting commitment to providing our customers with better choices, creating shared success with our stakeholders—as we create meaningful breakthroughs as a conglomerate. This fuels our passion to keep our business agile and sustainable so we can look forward to the progress we will make in the many years to come.
James L. Go