Aboitiz finally out of the maritime industry

Aboitiz Equities Ventures (AEV) being a Cebuano owned company is close to our hearts in the sense that they are undoubtedly the biggest Cebuano-owned company in the country. Last Monday, AEV held a presscon with the Cebu media to coincide with its annual stockholders meeting held at the Radisson Blu Hotel, and what an annual report Erramon I. Aboitiz, president and chief executive officer and its chairman of the Board Jon Ramon Aboitiz gave its shareholders, which truly conveys its mission statement, “To create long-term value for all its stakeholders.”

AEV ended the year 2010 with consolidated revenues close to P75 billion or a 113 percent increase from the previous year 2009, all due to the acquisitions of AboitizPower. Operating income contribution from these assets enhanced AEV’s cash generating capability that resulted in an Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of a little over P40 billion or a whooping increase of 156 percent from the previous year 2009.

AEV hit a record-high consolidated net income of P21.9 billion in 2010 or a 163 percent increase year on year. AboitizPower ended the year 2010 with an income distribution of P19.1 billion or 342 percent higher than the previous year. Its consolidated revenues rose up to around P60 billion recording a total of 157 percent year-on-year growth. What can we say, but congratulations to AEV, their success translates to success for the Philippine economy.

Year 2010 is quite significant for the Aboitiz Group of Companies as it finally divested AEV’s entire holdings in Aboitiz Transport System (ATS) to Negros Navigation Company (Nenaco) by December 2010. As president Erramon Aboitiz pointed out, “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. Your board’s decision was premised on Nenaco’s offer being representative of Aboitiz Transport’s value and that reinvesting the sale proceeds in other identified areas would enhance shareholder value over the long term.”

This was the question I posed to Mr. Montxu Aboitiz whether the Nenaco deal was a done deal, and he told me that it was done by December 2010. The reason I asked was due to the fact that a couple of years earlier, after the hoopla of Nenaco’s acquisition of ATS, the deal was suddenly cancelled. I learned that it was due to money problems plaguing Nenaco’s Kuwaiti partners. But Mr. Aboitiz said that this time around, their Chinese partner China Asia Fund was quite liquid and the deal finally came together. Hence ATS, Cebu Ferries and 2GO are no longer owned by the Aboitiz Group of Companies. Thus ends the Aboitiz name in the Philippine maritime industry.

So where will they invest the money from the sale of ATS? Well for starters, we already wrote about this a couple of weeks ago that AboitizPower was ready to construct a 300MW circulating fluidized-bed coal-fired power plant in Southern Davao worth P25 billion to answer to the huge demand for power in Mindanao. This project will be financed by the Aboitiz Group themselves or perhaps refinanced later, but the focus is to get construction going.

This power plant is close or similar to the Sangi Power Plant in Toledo City, Cebu that uses “Cleanergy” technology, a technology that literally silenced the noisy environmentalist opposed to coal fired plants because it has scrubbers that cleanse the dirt from coal and emits only white smoke. I was with my good friend, DySS broadcaster Super Bobby Nalzaro who always wears white clothes when Formosa Power invited us to Taipei to see this technology. We stood close to the exhaust funnel and we only saw steam exiting out of the smokestack and Bobby’s white clothes still white!

The issue on a planned shift to nuclear energy was also discussed, but thanks to the March 11 earthquake and tsunami, it has doused cold water into this plan. On the other renewable energy sources, AboitizPower isn’t jumping into the solar or wind energy bandwagon simply because of its huge capital cost, but very minimal energy production. Right now, AboitizPower wants to focus on its renewable, but self-generated technology like the Sibulan Mini-Hydro, a 42.5 MW mini-hydro power plant operated by Hedcor-Sibulan, Inc., a subsidiary of Aboitiz Power Corp. (APC).

I saw this plant a couple of weeks ago when we rode into Davao City and I was quite impressed by this mini-hydro project, a dream of the late Ernest Aboitiz. Because of the success of the Sibulan mini-hydro, a duplicate plant is now in the drawing boards. APC officials believe that the construction of more mini-hydros is the solution to the power needs of power hungry Mindanao. I’m sure this is applicable also in Bohol and in Negros Island.

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For email responses to this article, write to [email protected] or vsbobita@ gmail.com. His columns can be accessed through http://www.philstar.com.