Aboitiz Equity allocates P44B for capex in 2011

CEBU, Philippines - Amid the lower first quarter performance, Aboitiz Equity Venture (AEV) is expecting an encouraging business growth this year, allocating a total capital expenditure of P44 billion, of which P42 billion will be spent in expanding its power generation business.

AEV and Aboitiz Power (AP) held its 2010 Stockholders Meeting yesterday at the Radisson Blu Hotel Cebu, reporting a good 2010 year performance of 113 percent consolidated revenues reaching to close to P75 billion.

In an interview with AEV president and chief executive officer (CEO) Erramon I. Aboitiz the P42 billion capex for Aboitiz Power this year will go expansion of its power generation capacity, and the P2 billion will be distribution for the rest of the AEV business specifically food (Pilmico Foods) and banking (Union Bank and City Savings Bank).

With the market's volatility, Aboitiz said it is hard to predict the target growth of the company this year, however, he expressed confidence that earnings will be rosier in the next quarters, considering that power demand is starting to pick up.

“Lower net generation, softening spot market prices and increase in fuel cost are some of the factors that led to the decline in the power generation business, that offset the improvement in the earnings contribution of the distribution business,” said Aboitiz.

The first quarter 2011 had registered a net income of P4.6 billion, a 26 percent lower than the same period last year.

Of the total contribution from AEVs subsidiaries, the power group provided 85 percent equivalent to P3.9 billion, a 31 percent decline year-on-year.

The banking group shored in P422 million for this particular quarter, an increase of 11 percent over the same period last year. Its food arm on the other hand, contributed P282 million, a 24 percent lower than the same period last year. The decline was due to the increase of output and commodity costs.

Aboitiz reported to its stockholders that the company hit a record-high consolidated net income of P21.9 billion in 2010, a 163 percent increase year on year.

“Our long-term perspective, and the result of patient and disciplined investing during the global economic slowdown have paid off quite handsomely,” he told stockholders.

Of the total earnings contribution from AEV's four strategic business units (SBUs), the power unit took the major lead turning in P19.1 billion or 85 percent of the total earnings contributions to the company.

The banking and food units ranked second and third, contributing 12 percent and seven percent, respectively to total income contributions of AEVs SBUs, thereby offsetting the negative share of the integrated transport and logistics group.

AboitizPower ended 2010 with an income contribution of P19.1 billion, a 342 percent higher than in the previous year. It's consolidated revenues catapulted to about P60 billion, recording a 157 percent year-on-year growth.

“After AboitizPower went public in 2007, we undertook major growth and investment moves to increase our generating capacity. In 2010, we put those assets to work and maximized the value of our portfolio,” said Aboitiz.

“Over the last few years, we have remained resolute in our objective to assemble portfolio of power assets that would not only complement each other but also make us more competitive over the long run,” he added.

Late last year, AEV finalized its sell-out deal of its transport/logistic business or Aboitiz Transport System (ATS) to Negros Navigation Company (Nenaco).

“The divestment was a very difficult decision to make as we have been in the transport business for over 100 years and it was what Aboitiz was most known for,”he said of the ATS sale. (FREEMAN)