Aboitiz CFO Lozano: Power to contribute less than half of AEV’s revenues by 2025

By VG Cabuag - August 5, 2019

https://businessmirror.com.ph/2019/08/05/aboitiz-cfo-lozano-power-to-contribute-less-than-half-of-aevs-revenues-by-2025/

THE Aboitiz group may see its power business contributing less than half, from the current two-thirds of the company’s revenues only by 2025, as its infrastructure ventures—which may include airport maintenance and operation—are still in early stages of operations. 

Manuel R. Lozano, the company’s chief finance officer, said at the moment the company only has the cement business under the infrastructure group and a small water distribution firm. 

It has, however, a standing bid to operate airports in Laguindingan and Bohol, which he said will be a major contributor to the group in the future, while it is also actively participating in the common tower program of the government, which sees telcos sharing the towers across the country. 

“What we really want to see is…big subsidiaries like infrastructure, food, financial services [becoming] 10- to 15 percent [contributors to AEV], each of them, and even up to 20 percent, so that power does not dominate the contribution so much,” Lozano said. 

“The airport [Ninoy Aquino International Airport redevelopment] hopefully, if we complete that, that will be a big one for us. Apo Agua [bulk water project in Davao] will not be contributing until 2021. The towers, that one could be a bit faster we can use the existing assets but all that discussion [may take shape] by next year,” he said. 

Aboitiz is part of the so-called super consortium that proposed to redevelop and maintain the Naia, but Lozano said that may take time to contribute, as talks are still ongoing. 

During the last three years, the Aboitiz group has been busy modernizing the equipment in its cement venture, under Republic Cement. Lozano said that effort, called de-bottlenecking, increased its production capacity in all of its plants to 8.8 million tons a year from about 7.5 million tons. 

“We have a scarce resource for cement, and we have several projects and potential expansions in Mindanao and Bulacan. But having a totally new site is going to be challenging,” he said. 

Lozano, however, said bringing down the contribution of the power group by less than half, from as much as three quarters of its revenues, is easier said than done since its power unit is also expanding. 

“That means the  other [business units] have to go fast. I think infra can [contribute higher] because it is starting from a low base, Pilmico with its new acquisition Gold Coin and [its] going outside the Philippines should help accelerate their growth,” he said.
“But if you talk to the [Aboitiz] Power team, no one there is trying to slow down. It will be a challenge especially, [as] we are going offshore on power as well,” he said. 

At the moment food, including its recent acquisition, still contributes just about 6 percent of the revenues, but Lozano said that may increase to 10 percent in the near future. 

For the first half of the year, Aboitiz Equity Ventures (AEV)  Inc.’s net income fell 11 percent to P9 billion, from P10.1 billion last year. 

Power accounted for 67 percent of the total income contribution to AEV, followed by banking and financial services at 24 percent, food at 6 percent, infrastructure at 2 percent and property development at 1 percent.