AEV slashes year’s budget by 36% to P47 billion as quarantine hits businesses

April 28, 2020 | 12:04 am
https://www.bworldonline.com/aev-slashes-years-budget-by-36-pct-to-p47-billion-quarantine-hits-businesses/

ABOITIZ Equity Ventures, Inc. (AEV) is slashing its 2020 capital expenditures (capex) by about 36% to P47 billion in a bid to cut spending as it factors in the impact of the coronavirus disease 2019 (COVID-19) pandemic.

In a statement Monday, the listed holding firm of the Aboitiz Group said it was removing P26 billion from its initial capex of P73 billion to “[consider] the impact [of the pandemic] on the group’s and country’s future growth.”

It said most of the reductions were originally allocated for its infrastructure, power and land units covering operating, maintenance and expansion costs.

“Most of our businesses are in industries that are vital to keeping the economy running. Filipinos need electricity, food products, and money, for example. And for our other businesses, we have been prudent in capital expenditure spending so this should not be much of a problem,” AEV President and Chief Executive Officer Sabin M. Aboitiz said in the statement.

The implementation of an enhanced community quarantine (ECQ) since middle of March had varying effects on AEV’s different business segments.

Power unit Aboitiz Power Corp. said it noticed a slowdown in power demand, but consumption is starting to rise because of the warmer weather. The first unit of its GNPower Dinginin Ltd. Co. power plant in Bataan is set to start operations by the second quarter of 2021.

Banking unit UnionBank of the Philippines observed a tenfold increase in digital customers since the start of the ECQ. It has now boosted its services to allow direct fund transfers to remittance centers nationwide.

Pilmico Foods Corp. said its facilities and farms remained operational during the ECQ period. It plans to continue the integration of Pilmico and Singapore-based Gold Coin Management Holdings, Inc. this year, which will “[optimize] synergies in procurement, cross-selling across countries, and shared services in its corporate services units.”

Infrastructure arm Aboitiz InfraCapital, Inc. is still reviewing the impact of the pandemic on its projects, particularly those in the airport sector. Its bulk water supply unit Apo Agua Infrastructura, Inc. is coordinating with contractors on how to address the ECQ in Davao City.

Real estate unit Aboitiz Land, Inc. is continuing plans to build townships and logistics facilities as it anticipates a surge in demand after the pandemic. “AboitizLand expects the local real estate market to be quite resilient, with the large unmet demand for housing a significant contributing factor,” it said.

Construction unit Aboitiz Construction, Inc. also remains in operation for projects in Balamban, Cebu and Mindanao. For projects in areas under ECQ, work is still suspended at the moment.

“Digital infrastructure investments in previous years and regular business continuity planning has allowed us to cope with the adverse impact of COVID-19. While it’s anyone’s guess how the future will unfold, we assure our stakeholders that we are fully equipped and prepared to guarantee the continuity of all business transactions,” Mr. Aboitiz said.

AEV booked a net income of P22 billion last year, 1% lower from a year ago, due to a double-digit profit decline in its power unit because of power outages. Shares in AEV at the stock exchange gained P1.85 or 4.55% to P42.50 each on Monday. — Denise A. Valdez