Aboitiz Equity profit falls in 2015 as property, bank earnings drop

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ABOITIZ EQUITY Ventures, Inc. (AEV) reported a 4% decline in its 2015 consolidated net income to P17.7 billion from P18.4 billion in the previous year as two of its major subsidiaries posted a double-digit decline in their contribution to the listed holdings company.

In its disclosure to the stock exchange, AEV said it incurred a nonrecurring loss of P602 million last year, a reversal of 2014’s gain of P436 million, because of the mark-to-market revaluation of the power business unit’s consolidated dollar-denominated assets and liabilities.

“Adjusting for these one-off’s, AEV’s core net income amounted to P18.3 billion, which was 2% higher than [in 2014],” it said.

AEV said its banking and financial services unit Union Bank of the Philippines and its property business Aboitiz Land, Inc. recorded a drop in net income by 22% and 15%, respectively. The two accounted for 14% and 9% to the parent firm’s business, or a corresponding contribution of P2.5 billion and P536 million.

UnionBank, which posted a net income of P5.3 billion, did not register trading gains last year although growth in recurring income was strong.

AEV’s lower income for the year comes despite Aboitiz Power Corp.’s (AboitizPower) strong showing, with a 5% year-on-year increase in its bottom line to P17.6 billion from P16.7 billion. The power generation and distribution subsidiary, which made up 73% of the holding firm’s business, contributed P13.5 billion, up 6% from P12.7 billion in 2014.

In mid-September 2015, AEV’s infrastructure unit, the newly acquired Republic Cement and Building Materials, Inc. started contributing a share in the business, at P194.4 million during review period.

“The income contributions from our infrastructure and offshore food businesses affirm our growth strategy to diversify our earnings base through our fifth business leg, infrastructure, as well as gradually expand overseas, not just locally,” said Erramon I. Aboitiz, AEV president and chief executive officer.

He said the company would continue to pursue “selective” leads in public-private partnership projects “as the government opens up unique opportunities in key infrastructure segments.”

“We expect to invest time and resources in finding the right local and international partners that can provide the market and technical know-how, in addition to our local market knowledge and industrial expertise,” Mr. Aboitiz said.

AEV’s nonlisted food subsidiaries Pilmico Foods Corp., Pilmico Animal Nutrition Corp. and Pilmico International Pte. Ltd. recorded a 31% growth in after-tax income to P1.7 billion from P1.3 billion.

POWER BUSINESS STILL STRONG
In a separate statement, AboitizPower said its power generation and distribution business segments contributed 79% and 21%, respectively, to its earnings. This corresponds to an income share of P13.9 billion and P3.8 billion. Growth was stronger for the distribution business, at 19%, as against 3% for generation.

Excluding one-off items, AboitizPower’s generation business generated P14.8 billion for the period, up 9% from the earlier year.

“The growth was attributable to the higher sales volume from the coal and large hydro groups that offset the decrease in revenues from the geothermal group due to steam decline. Moreover, the impact of Magat, Binga, and Therma Marine plants’ ITH (income tax holidays) expiration were offset by the large hydro group’s lower financing cost and the geothermal group’s and oil business unit’s lower operating expenses,” the company said.

AboitizPower registered an 11% increase in power generation to 12,550 gigwatt-hour (GWh) from 11,272 GWh, as electricity sold via bilateral contracts, which accounted for 91% of total energy sold, rose by 18% to 11,383 GWh.

In terms of capacity, higher sales through bilateral contracts and ancillary services increased the company’s attributable sales by 6% to 1,900 megawatts (MW).

“We remain on track with our project pipeline as we welcomed new capacity from a number of power plants last year. This puts us well on the path to hitting 4,000 MW in national capacity by 2020 to meet the country’s energy needs,” Antonio R. Moraza, AboitizPower president and chief operating officer, was quoted in a statement as saying.

“Our portfolio of power plants composed of a right mix of renewable and non-renewable technology is a testament to our commitment to provide reliable, ample, and reasonably priced power with the least impact on our environment and our host communities,” he added.

Under the power distribution segment, electricity revenues increased by 6% to 4,759 GWh from 4,480 GWh as sales grew across all customer segments. Gross margin on a per kilowatt-hour basis decreased to P1.61 from P1.71 previously.

AEV shares closed 0.17% up to P60.20 apiece, while AboitizPower shares were unchanged at P43.95 apiece.