APC tempers Aboitiz Q1 gains

Conglomerate Aboitiz Equity Ventures (AEV) saw its profits grow by 17 percent in the first quarter, boosted by one-time gains from the recent sale of one of its banking units and the revaluation of its liabilities.

The company, which has interests in the energy, banking, property, and food businesses, posted a net income of P6.8 billion in 2013.

In the first quarter of 2013, AEV booked one-off gains worth P119 million due to the revaluation of consolidated dollar-denominated loans and placements. The conglomerate also gained P1.27 billion from the sale of City Savings Bank Inc.

The pre-termination of loans by the Power Strategic Business Unit (SBU) also resulted in a one-time write-off of the unamortized borrowing costs amounting to P71 million.

Excluding non-recurring movements, AEV said its consolidated net income for the three-month period would have stayed relatively flat at P5.5 billion, or just 1.3-percent up from the year before.

Of the total earnings contributions from its business units, the power business accounted for 62.1 percent, while the income contribution of the banking, food and property operations were at 31.5 percent, 5.7 percent, and 0.7 percent, respectively.

Despite making up the most to the group’s bottom line, AEV’s power generation unit, Aboitiz Power Corp. (APC), contributed P3.1 billion during the quarter—down 22 percent year-on-year.

In the first quarter, APC posted an 18-percent decline in its consolidated net income to P4.6 billion due to a drop in electricity prices and decline in the volume of electricity sold.

APC’s core net income in the first three months also fell by 11 percent to P4.5 billion compared to a year ago, APC reported yesterday.

Lower water levels at the company’s impounding dams curtailed the company’s ability to sell energy at the wholesale electricity spot market. When adjusted for non-recurring items, the group registered a 15-percent decrease in the core net income of its power generation business to P3.9 billion.

APC also reported that the group’s average price for its power fell by 11 percent year-on-year. The average selling price at the WESM dropped by 6 percent. For bilateral contracts, the price declined by 10 percent.

The company’s net generation also remained flat at 2,450 gigawatt-hours in the first three months of the year.

But even though it lost some ground in the first quarter, APC remains bullish in 2013 and beyond, citing the economy’s rising energy demand on the back of the country’s growth.

“We believe APC’s growth plans of building additional generating capacity nationwide dovetails quite nicely with this requirement for available, reliable and competitive power,” said APC president and CEO Erramon I. Aboitiz.

The decline in the energy business’ contribution was offset by the 35-percent increase in profit from AEV’s banking operations, and the 48-percent rise of its food business.