Jun. 27--THE Gokongwei group has cut its capital expenditures for this year as it anticipates a slowdown in its food and airline businesses due to the weak economy and the spreading Influenza A(H1N1).

Following the company's stockholders' meeting, Lance Gokongwei, JG Summit Holdings Inc. president and chief operating officer said capex for this year would amount to P28 billion, lower than the P33.4-billion spent in 2008.

Of the amount allotted this year, P12 billion would go to telecommunications; P5 billion, airline; P7 billion, property; P3 billion, food; and the remaining P1 billion for other businesses.

"Primarily we continue to invest in the telecom and property. We've been slow[ing] down a little bit in [the] airline [business]. For this year, we only took two Airbus and four ATRs. And then in URC [Universal Robina Corp.] it [is] also a slowdown because we completed our sugar refinery expansion last year," Gokongwei said.

He said the airline market is going to shrink this year because of the economic slowdown and the Influenza A(H1N1).

"Most of the growth would come from the market growing. We slow[ed] down our rate capacity addition. We're a little bit cautious in this kind of environment. If we need an extra lift we can easily lease additional aircrafts," he said.

Gokongwei said the global slowdown and the spread of A(H1N1) has taken its toll on the airline business, particularly the international routes of North Asia like China, Japan and Hong Kong.

On the local front, he said the airline industry has continued to grow at about 20 percent compared with the 3-percent to 9-percent contraction globally.

Gokongwei said the food business has started to experience some weakness. "The rain this summer affected the beverages, the A(H1N1) and delay in the school opening hurts the snack business because people can't get their allowance if they don't go to school," he said.

Business however is still growing, he said, adding that, "We're g[r]o[w]ing at a good rate. Our margin continue[s] to improve year on year. We expect our profit to continue to improve at a standard rate. We expect a double digit growth in terms of earnings and cashflow."

Asked if the company plans to reassess its business portfolio, such as dispose of its airline or telecom businesses, Gokongwei said, "Cebu Pacific is doing well and [the] telecom business is showing a much improved performance as it reaches economies of scale. The EBITDA [Earnings Before Interest, Taxes, Depreciation and Amortization] growth in telecom for the first quarter alone doubled."

For next year, Digital Telecommunications Phils. Inc. (Digitel) could "generate enough cash to fund its capex," he said.

The company is investing more in telecoms as it constructs more cell sites to improve network coverage.

As to its mall business, "we're not seeing weakness," Gonkongwei said, adding that JG Summit expects revenues to grow between 15 percent and 20 percent this year.

"On the core earnings we are very strong, we're up 69 percent last year, our ebitda was P25 billion out of the 100 billion revenues. This year we expect about 15-percent to 20-percent revenue growth and we expect ebitda to continue go up by 15 [percent] to 20 percent," he said.

"On a recurring basis we will have a record breaking year," he added.

Last year, the company incurred a net loss of P694 million, a sharp turn from the P11.37-billion profit it enjoyed in 2007.

Revenues grew 29 percent to P99.87 billion from P77.37 billion as most of its subsidiaries posted double-digit growth.

At end-March, the company posted a 28-percent growth in profits at P863.99 million from P675.85 million in the same three-month period a year ago.

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