Aboitiz transport unit suffers 80% profit drop

MANILA, Philippines - Aboitiz Transport System (ATS) posted a huge 80.3-percent drop in its net net income, from P420 million in 2007 to P82.8 million last year, due largely to the steep rise in fuel costs.

Consolidated revenues, however, stood at P10.3 billion in 2008, a 25-percent increase from P8.2 billion in 2007.

The company’s freight business contributed P5.4 billion in revenues in 2008, a 22-percent increase from P4.4 billion in 2007. The company’s freight rates per 20 foot-equivalent unit (TEU) rose 16 percent as freight capacity is being filled up with its own supply chain and value-added business.

Company officials explained that ATS is reducing its reliance on spot and market cargo which is more price driven. In 2008, capacity remained at the same level as the prior year with close to 250,000 TEUs, at 88-percent utilization rate.

Passage business was lower at 2.9 billion revenues (inclusive of auxiliary income) from P2.95 billion in 2007. The average rate per passenger has gone down by five percent as the company continued to offer year-round promotional rates to drive up demand and face stiff competition from the airlines.

Similar to the freight business, ropax passage capacity remained at the same level as the previous year with over three million passengers but with a much higher utilization rate at 70 percent, the highest attained in four years.

Officials also pointed out that last year, much of the company’s efforts were geared towards developing its value-added business where it believes much of its future will lie. Aboitiz One Distribution’s new warehouse with 22,000 pallet positions located in Taguig City has been operational since the beginning of 2009. In addition, Aboitiz One Inc. purchased Scanasia Overseas, a company engaged in the business of sales, marketing, warehousing and transportation of temperature-controlled and ambient food products to its customers in the Philippines.

These resulted in a 45-percent increase in service fees revenues to P674.6 million and a 418-percent increase in sale of goods to P1.2 billion in 2008.

Furthermore, ATS last year registered an after-tax gain of P405 million on the disposal of three vessels.

Last Dec. 19, the major shareholders of ATS namely, Aboitiz Equity Ventures Inc. (AEV) and Aboitiz & Co. (ACO), accepted the term sheet offered by KGLI-NM Holdings for the acquisition by KGLI-NM of 49-percent equity stake in ATS instead of the total buy-out proposed in the memorandum of agreement signed by the parties in September 2008.

KGLI-NM is a domestic company, which is jointly owned by Negros Holdings and Management Corp. and KGL Investment BV, which is beneficially owned by the KGL Investment Co., a Kuwaiti company.

The 49-percent equity stake includes the seven-percent equity stake of the public in ATS. Under the present agreement, which is expected to close on or before April 30, 2009, the purchase price will be based on a total equity value of ATS in the amount of P4.5 billion or equivalent to P1.84 per share.

The agreement also provides an option for KGLI-NM to acquire the remaining 51- percent equity stake of AEV and ACO anytime from May 1, 2009 to Sept. 30, 2009 at the same price plus a premium of 9.5-percent annualized price per share calculated from April 30 to Sept. 30, 2009, or to date of acquisition. KGLI-NM will make a tender offer for the ATS shares held by the public.

The planned acquisition excludes the Aboitiz Jebsen Group. Consequently, ATS posted P778.6 million of assets and P697.2 million of liabilities directly associated with asset of disposal group classified as held for sale.