Aboitiz holding firm posts 5% drop in 9-month profit

Aboitiz Equity Ventures Inc. posted a nine-month consolidated net income of P16 billion, down 5 percent from a year ago, due to the lower selling price and output of its flagship power generation business.

But for the third quarter alone, AEV’s consolidated net profit increased 5 percent to P5.8 billion from a year ago. Adjusting for one-off items, AEV closed the quarter with core profit of P5.8 billion, 16-percent higher than a year ago.

For the January-to-September period, the power business accounted for the lion’s share of earnings at 77 percent, followed by the banking and food units with income contributions of 17 percent and 6 percent, respectively.

Aboitiz Power ended the first nine months with a consolidated income of P16.2 billion, down 12 percent from a year ago.

Income contribution from banking recorded a 38-percent improvement to P2.7 billion. In particular, Union Bank of the Philippines ended the period with an earnings contribution of P2.3 billion, up 26 percent from a year ago. Total interest income increased with the expansion of average earning assets, notwithstanding the decline in average asset yields.

Meanwhile, contribution from the food business slipped 24 percent to P937 million in the first nine months as higher input costs weighed down the profitability of the flour and swine segments.

For the nine-month period, the power-generation business contributed earnings of P11.7 billion, recording a 16-percent drop. As a group, Aboitiz Power’s generation business logged a 10-percent decline in average selling prices given the softening of the spot market prices compared with 2010 levels. The average price of electricity in the Wholesale Electricity Spot Market (WESM) recorded a 48-percent year-on-year drop for the nine-month period.

Demand for electricity, particularly on the island of Luzon, was relatively flat compared with last year’s demand. Supply, in the meantime, showed increases given marked improvements in outage levels for Luzon-based power plants.

The adverse impact on earnings, however, was tempered by Aboitiz Power’s strategic move to lower its exposure to the spot market with the group’s increased contracted capacity.

On the other hand, Aboitiz Power’s net generation for the first nine months declined from 7,340 GWh to 7,175 GWh. The drop was due to reduced spot market transactions brought by the prevailing low prices in the WESM.

“Our power-generation and distribution businesses have continued to show strong recurring income for the quarter,” AEV and Aboitiz Power president Erramon Aboitiz said.