Aboitiz Equity reports 6% lower income of P1.56B in first half

Aboitiz Equity Ventures Inc. (AEV), the listed investment holding company of the Aboitiz family, reported a six-percent drop in its first half net profit this year to P1.56 billion, mainly due to lower earnings from its banking, food and transport units.

In a disclosure to the Philippine Stock Exchange, AEV said the first half net income is equivalent to an earnings per share (EPS) of 32 centavos.

AEV said earnings before interest, taxes, depreciation and amortization (EBITDA) likewise declined by eight percent to P3.13 billion.

In the second quarter alone, AEV earned P906 million, down 13 percent from the previous level.

AEV’s power group, consisting of distribution and generation, contributed P965 million in the first six months of the year, up 10.7 percent over the same period last year.

The power distribution group accounted for P628 million or an increase of 24 percent from the year earlier level. Despite low volume growth, this sector registered significant earnings growth as a result of better operating efficiencies.

Power generation contributed P337 million, down eight percent due to lower results from Luzon Hydro Corp.

As for its banking business, Union Bank of the Philippines contributed P495 million or a 20-percent decline from the previous level. It registered a net income of P1.1 billion from P1.5 billion, as a result of the interim impact of expenses related to the purchase of International Exchange Bank, and weaker margins as domestic interest rates fell.

In June, Union Bank purchased 98.8 percent of iBank through a special block sale coursed through the PSE. The merger with iBank is expected to create the industry’s seventh largest private universal bank with assets of around P170 billion and deposit base of close to P100 billion. The combined branch network of 191 is expected to place sixth in the industry.

The merger is expected to take place in the third quarter this year with Union Bank as the surviving entity.

AEV’s food group, on the other hand, contributed P199 million, almost six percent lower than the year earlier figure. This was attributed to higher raw material costs in its flour and feeds businesses, as well as a softer market for its flour and swine.

Meanwhile, the transport group (under Aboitiz Transport System Corp.) contributed a net loss of P1.1 million in the first six months, a reversal from the P214-million net income reported the previous level. This was attributed to higher fuel costs and the decline in the company’s international charter business.

Passage and freight revenues also experienced a drop versus last year, as fleet capacity has been reduced. Aggressive promotions from the airlines have also reduced the margins in passage.