Power businesses push AEV net income higher

Posted on July 29, 2016
http://www.bworldonline.com/content.php?section=Corporate&title=power-businesses-push-aev-net-income-higher&id=131134

ABOITIZ Equity Ventures, Inc. (AEV) posted a 34% jump in consolidated net income in the first half to P10.5 billion after the strong performance of its business in the power sector, which accounted for 67% of the semester’s bottom line.

“Our two-pronged strategy of organic growth in our existing businesses and diversifying our income streams from our fifth leg -- infrastructure-related businesses -- is on track and paying off,” said Erramon I. Aboitiz, AEV president and chief executive officer, in a statement on Thursday.

“We are very pleased with the strong contribution of our cement business and the prospects of infrastructure moving forward,” he added.

Banking and financial services had the second-biggest revenue contribution for AEV during the period, accounting for 16.8%. Food, infrastructure and land contributed 7.8%, 7.6% and 0.7%, respectively.

In a separate statement, subsidiary Aboitiz Power Corp. reported a 24% increase in first-half net income to P10 billion after a double-digit increase in sellable capacity as a new power plant came online during the period.

“Together with our partners, our net sellable capacity has grown to 3,350 MW [megawatts],” Antonio R. Moraza, AboitizPower president and chief operating officer, said in a statement on Thursday.

Core net income, which excludes foreign exchange losses and one-time items, rose by 20% to P9.8 billion. The revaluation of consolidated dollar-denominated assets and liabilities resulted in a nonrecurring loss of P70 million, down from last year’s loss of P142 million.

Among business segments, the power generation units contributed 82% of earnings and registered an income share of P8.1 billion, higher by 27% from a year ago. Excluding one-off items, the generation business amounted to P8.2 billion, up 25% from a year ago.

Sales of electricity rose by 13% to 2,020 MW from 1,795 MW, with unit Therma South, Inc. primarily accounting for the increase. The power plant in Davao City, the two units of which have a combined capacity of 300 MW, was inaugurated in January 2016.

The sales numbers represent those that are attributable to the company’s share in the power generation project, which sometimes have a number of partners.

“We are pursuing more projects -- baseload, solar, biomass, hydro and geothermal -- that will allow us to strengthen our balanced mix portfolio,” Mr. Moraza said. “We believe that it is important to provide this balanced mix of energy to support the needs of our country with adequate, reliable and competitively priced power.”

AboitizPower said Magat Dam’s improved water inflow, particularly in June, added to capacity sales. SN Aboitiz Power-Magat, Inc. owns and operates the 360-MW Magat hydroelectric power plant at the border of Isabela and Ifugao. -- Victor V. Saulon

As a result, energy sales increased by 21% to 6,889 gigawatt-hours (GWh). Bilateral sales made up 93% of the total volume sold, which rose by 28% to 6,414 GWh. Spot sales dropped by 31% to 475 GWh.

AboitizPower owns distribution utilities that operate in Luzon, Visayas and Mindanao, including the second and third-largest private utilities in the country.

In power distribution, first-half earnings share increased by 3% to P1.8 billion from P1.7 billion. Total attributable electricity sales rose by 7% to 2,512 GWh from 2,338 GWh. The increase in volume sold came from Visayan Electric Co., Inc., Davao Light & Power Co., Inc. and San Fernando Electric Light and Power Co.

Meanwhile, AEV unit Union Bank of the Philippines and its subsidiaries contributed a P1.9-billion income to the holding firm, a 121% increase due to “robust growth in core recurring income.”

AEV’s non-listed food subsidiaries Pilmico Foods Corp., Pilmico Animal Nutrition Corp. and Pilmico International Pte Ltd. recorded a combined P885 million income contribution to the firm, which was “relatively flat.”

Aboitiz Land, Inc.’s income contribution to AEV decreased by 60% to P85 million from last year’s P213 million, due to a 63% decrease in revenues from its industrial business unit as “prospective locators held off commitments in light of the recent national elections.”

Infrastructure unit Republic Cement and Building Materials, Inc. posted an income contribution of P869 million. It started contributing in mid-September 2015.

On Thursday, AEV closed 2.68% lower to P78 each, while AboitizPower shares added 0.33% to P45.35 each. -- Victor V. Saulon