Aboitiz Equity posts 18% profit growth in 1999

Aboitiz Equity Ventures (AEV), the holding company of the Aboitiz Group, posted a net profit growth of 18 percent in 1999, buoyed by the strong performance of its power, banking and portfolio investment groups.

The board of directors also approved a cash dividend of two centavos per share, with record date of May 31, 2000 and payable on June 30, 2000.

Top officials during the AEV annual stockholders' briefing on May 11 at the Makati Shangri-La Hotel in Makati City, disclosed that net profit rose 18 percent to P1.216 billion in 1999 from P1.031 billion in 1998.

In his report, CEO Jon Ramon Aboitiz said earnings per share increased from 19 cents to 23 cents, while EBITDA (earnings before interest, taxes, depreciation and amortization) surged 21 percent to P1.826 billion from P1.505 billion. The growth was despite goodwill and developmental cost write-offs amounting to P268 million.

In income, the power group continued to account for the lion's share, contributing 58 percent, followed by the banking group with 27 percent, and portfolio investments with 15 percent. The power group grew 16 percent to P733 million from P633 million, largely a result of a profit surge in its mini-hydro company HEDCOR and a larger income share in the Visayan Electric Co. (VECO). HEDCOR's net income rose 66 percent from P101 million to P167 million, as it benefited from improved operating efficiencies in 1999 that lifted monthly power generation to a record 25 million-kilowatt-hours.

Aboitiz said AEV remains bullish over Mindanao, despite the ongoing tension in the region.

"This is not the first time this thing has happened and we are confident that the problems will be resolved soon."

Meanwhile, AEV upped ownership shares in VECO from 16 percent in 1998 to 41 percent in 1999. This pushed its shares of VECO's income from P41 million to P132 million.

The power group's biggest income contributor, Davao Light and Power, put in P285 million, 12 percent lower than 1998.

Cotabato Light and Power expanded its income contribution by seven percent to about P68 million, while Western Mindanao Power Corp. and Southern Philippines Power Corp. hiked its contribution by 12 percent to P113 million. The overall strong income performance of the power group resulted in a stronger EBITDA of P1.131 billion from P928 billion.

Amid a difficult banking environment, the banking group's revenue of P342 million was 14 percent less than in 1998, but its performance in the industry "continues to be superior," according to Aboitiz. While UnionBank ranked only 11th in assets, it ranked 4th in net income (P1.052 billion in 1999, although 13 percent less than 1998), and it is now among the top five universal banks in market capitalization, he added. Despite a lower 1999 income contribution of P11.7 million from P12.1 million in 1998, City Saving Bank continued to outperform its peers in the thrift banking industry, said Aboitiz. Its return on equity of 18 percent generated P35.2 million in profits. Its past due loans were less than half the industry average, and its deposit base continued to grow.

For its part, the portfolio investments group logged a strong turnaround in 1999. From a loss of P64 million in 1998, the group contributed P183 million, the bulk coming from steady earner Pilmico Foods which had a good year and the transport group which practically reduced contribution loss P3.5 million from P207 million in 1998. WG&A led to the turnaround, recording a profit of P136 million in 1999 from a loss of P798 million in 1998, on improved service and streamlined operations.

Investments last year increased 25 percent to P9.4 billion. By end-1999, AEV's balance sheet reflected a robust asset growth of 15 percent from about six percent in 1998, and consolidated debt to equity ratio of a low 0.29:1.00