AEV’s 9-mo income falls 14% to P14.3B

MANILA, Philippines - Profits of the Aboitiz family’s holding firm plunged in the first nine months compared to the same period last year as higher earnings from food and real estate business units failed to offset an un-energized power operations and weak banking business.

Earnings for the the third quarter period alone, however, was slightly higher than the amount recorded during the same period a year ago.

Aboitiz Equity Ventures Inc. (AEV) said its consolidated net income fell 14 percent to P14.3 billion in the first nine months of the year from PP16.6 billion during the same period last year.

The holding firm’s core net income, which excludes non-recurring items, likewise declined 16 percent to P13.9 billion in the first three quarters of the year.

 “The drop in our net income does not affect the fundamental value of our businesses. Our future growth plans remain intact as we continue to strengthen our businesses in keeping with the country’s economic growth,” said Erramon I. Aboitiz, AEV president and chief executive officer.

As of the nine-month period, the power business accounted for 72 percent of AEV’s total earnings, followed by banking, food and real estate at 17 percent, seven percent, and four percent, respectively.

For the July to September period alone, however, AEV posted a slight improvement in its earnings compared to the same period last year.

AEV’s consolidated net income in the third quarter alone grew three percent year-on-year to P4.8 billion while core income also increased nine percent to P5.2 billion.

Aboitiz Power Corp., the holding firms power unit, registered an eight percent lower income contribution of P10.1 billion in the first nine months of the year compared to the previous year’s P11 billion.

AEV attributed the decline to the full-year impact of the implementation of the Geothermal Resource Supply Contract of the Tiwi-Makban plants, limited operations of the Magat plant due to low water levels, and the expiration of the Pagbilao plant’s income tax holiday starting January this year.

AboitizPower’s attributable net generation rose by two percent year-on-year from 8,245 gigawatt-hours (GWh) to 8,395 GWh as electricity sold through bilateral contracts expanded by five percent to 7,129 GWh.

AboitizPower’s distribution group, meanwhile, saw its total attributable electricity sales rise by nine percent year-on-year from 3,024 GWh to 3,299 GWh, driven by a growth in industrial sales with the acquisition of Lima Enerzone last June 2014.

 “We are increasing our portfolio, ensuring that we have the balanced mix of energy sources, composed of both renewable and non-renewable energy, to secure ample, reliable and reasonably-priced energy choices to support the nation’s constantly growing demand for power,” Aboitiz said.

The banking strategic business unit’s income contribution for the period ending September, meanwhile, also plummeted 28 percent year-on-year from P3.3 billion to P2.4 billion.

AEV said net interest income for the first nine months of the year grew 25 percent to P8 billion, in view of the  robust  expansion in average earning assets alongside the continuous reduction  in average costs of interest bearing liabilities.

Union Bank of the Philippines’ resources dipped slightly by two percent to P388.5 billion from year-end 2013 level of P396.1 billion.

“We continue to lay the foundation for growth opportunities ahead of the stringent Basel III requirements by increasing the bank’s capital base,” Aboitiz said.

 “Our banking business unit remains well-capitalized and ready to grow significantly by product and channel expansion and, when opportune, by merger or acquisition,” he added.

Despite the lower earnings in the power and banking businesses, AEV saw better performances from its food and real estate units.

Food unit Pilmico Foods Corp. posted a one percent year-on-year increase in its income contribution for the first nine months of 2014, from P932.1 million to P942.2 million.

Aboitiz said Pilmico would continue to position itself as a dependable partner for growth not only in the country, but also in the ASEAN region.

 “We will seek to grow more aggressively through product expansion, strategic alliances, and mergers and acquisitions,” he said.

Likewise, property unit Aboitiz Land, Inc., registered a 247 percent year-on-year growth in its net income contribution as of end September from P162.8 million to P565.4 million on the back of strong revenue growth in the industrial, residential and commercial segments.  

Buoyed by the strong performance of its business units, Aboitiz Land revenues breached the P2 billion mark for the first time, almost triple from the same period last year.

 “We remain supportive of the government’s public-private partnership program, cognizant of the critical state of the country’s infrastructure, and urge the President to swiftly settle the Cavite-Laguna Expressway (CALAX) stalemate,” Aboitiz said.