Aboitiz keeps ‘economic engines’ running toward recovery

Sabin Aboitiz

Over a year into the devastating COVID-19 pandemic, the Aboitiz Group is ready to march toward recovery with renewed —yet prudent—optimism.

Like most other organizations, the Aboitiz Group encountered setbacks last year given quarantine restrictions that have dampened consumer demand and investor appetite.

And yet the group’s strategic business units (SBUs) that operate in various critical industries including power, financial services and banking, food, infrastructure, and land, rose to the COVID-19 challenge and found ways to innovate and continue operating even with reduced budgets.

This year, Aboitiz Group president and chief executive ffficer Sabin M. Aboitiz said the key was to keep the group’s “economic engines running” while proactively managing ever-present risks.

“The full extent of its impact remains to be seen even as our economy is beginning to see marginal gains. While the Aboitiz Group is optimistic about recovery, we continue to closely observe emerging risks and manage the unintended consequences of some of our short-term decisions—for example, cutting down our [capital expenditures] and postponing some projects, with just enough to keep our economic engines going in preparation for recovery,” Aboitiz said.

As proof of its more positive outlook for 2021, the Aboitiz Group has decided to significantly increase its capex by 69 percent from 2020’s P29 billion to P48 billion.

“We are entering what we believe to be a time of recovery not just for the company, but for the whole world. We are taking with us the lessons we have learned in 2020, and approach 2021 with prudent optimism,” he said.

And this renewed enthusiasm is becoming more palpable as the company, which supplies about 20 percent of the country’s population through its critical businesses, continues to roll out projects and new initiatives, in recognition of its significant contribution to the Philippine economy.

“The way we lead our organization will determine the future of everyone who depends on us. We supply close to 20 percent of the country’s power and distribute electricity to major cities across the regions; we supply our partners in food that provide close to 20 percent of the flour and feeds for the bread and pork we eat; we produce close to 20 percent of the cement used in building our country,” he said.

Aboitiz’ banking and financial services business unit plays a major role in leading the digitalization of the industry, while land and infrastructure teams are also headed towards the ’20 percent’ number.

“So, it’s safe to say that close to 20 percent of the country is relying on us,” Aboitiz said.

Power

2021 is a significant year for its power business as it marks the beginning of AboitizPower’s 10-year growth strategy. The company is looking to significantly grow its Cleanergy portfolio, as it aims for a 50:50 balance between its renewable and thermal capacities by 2030.

Currently, Aboitiz

Power together with its partners is the Philippines’ largest owner and operator of renewable energy based on installed capacity. In the next 10 years, it is targeting to double its fleet size, with focus on renewable energy both domestically and internationally while selectively building baseload capacities to serve the country’s increasing energy demand.

Banking, financial

Despite the global effects of COVID-19 particularly in the banking industry, UnionBank’s disclosed 2020 financial results underscore the strategic importance of its digital transformation almost five years ago, as it is now harvesting its strategic rewards.

From the original target of attracting a million new customers, the bank was able to attract 2.4 million new accounts in 2020 with a large portion coming from digital account opening. It is the only top universal bank in the country that was able to introduce during the crisis period an account which can be fully opened without having to go to any physical branch, which resulted in large customer adoption.

As of January, the bank breached two million customers transacting via its app UnionBank Onlineー a quadruple increase from last year. Of these two million, 25 percent opened their accounts in a purely digital manner. Corporate customers using the bank’s ‘The Portal’, meanwhile, tripled to over 16,000 as of Jan. 2021.
As the bank lines up new features in its digital channels and Tech Up, especially more of the underbanked and unbanked countrymen, it aims to move full throttle in 2021 with the end in view of achieving a bank of enduring greatness.

Food

The Food Group’s strategy to ensure a sufficient level of raw materials to support customer demand and maintain an unhampered supply chain amid the pandemic helped keep its operations going.

To help boost the country’s pork supply chain, Pilmico Foods Corp. continues with its investments in its swine raising business and modernizing food production through its Triple A-rated meat processing plant, Tarlac Meat Masters. As a robust support system to the pork supply chain, the facility brings world-class processes, innovative technology and solutions, and the highest standards of food safety and traceability to produce uncompromised quality pork meat cuts. With the limitations of the quarantine, Pilmico is leveraging on its presence in e-retail markets via its online shops such as thegoodmeat.ph and The Good Meat flagship store in Lazada Fresh to provide its customers with convenient and safe way to buy quality meats, as well as pet food through Shopee and Lazada.

Infrastructure

Aboitiz InfraCapital will focus on investing in projects that will spur economic growth through better and integrated infrastructure facilities and services. This year, the company has allocated about P2.5 billion to ramp up the deployment of telcos’ small cells into its poles and the construction of macro towers, in support of the government’s thrust to increase digital connectivity in the country.

Despite the challenges brought about by COVID-19, Apo Agua is ramping up construction to complete the Davao City Bulk Water Supply Project (DCBWSP). Once operational, the DCBWSP will provide over 300 million liters of safe water daily to more than one million Davaoeños, supporting the city’s rapid growth.

As the Aboitiz Integrated Economic Centers continue to attract international and local locators from various industries, the company is investing P2.8 billion for land acquisition and redevelopment efforts. The expansion is well under way, which is expected to play a key role in the growth of regional centers and our country’s economic recovery, providing up to 25,000 jobs for nearby communities in Batangas and Cebu. Fully constructed commercial lots at LIMA Estate in Lipa will be available for sale in April. LIMA Estate is a 700-hectare Philippine Economic Zone Authority— registered economic zone that is home to 127 industrial locators, 167 retail and restaurants spaces, a 138-room four-star hotel, a transportation hub, over 2,000 households, and more than 58,000 employees.

Land

As it transitions to the new normal, AboitizLand has realigned its strategies and organization to build on its digital initiatives and make the customer journey as seamless as possible. It has pioneered the end-to-end home buying platform and through this hybrid strategy of digital augmenting in-person activities, the company hopes to further boost sales.

Property industry watchers observed a surge in demand from people moving out of condominiums for houses and lots with bigger spaces away from suffocating city lockdowns in the last quarter of 2020, as online modes of work and study is now the new norm. This shift in home buyers’ preference would be the key driver of recovery for the ailing real estate sector. AboitizLand’s horizontal residential developments, strategically located in next-wave cities and boasting of bigger spaces and open-air amenities, offer options for people who want to move out of the big cities, helping alleviate the housing supply backlog and contributing to the recovery of the property industry.

Construction

Aboitiz Construction kicked off 2021 with optimism, a new set of strategies and a comprehensive plan that are focused on diversifying its portfolio and assuring execution excellence in all projects.

To help spur economic growth, the construction firm is focusing on infrastructure, heavy and light industrial projects and support the maintenance and services industries. This will also mean job opportunities for thousands of Filipinos. Aboitiz Construction attributes its success to customer-focused support functions and team members who embrace agile, digital, and quality, while remaining deeply rooted in the company’s time-tested values of responsibility, integrity, innovation, teamwork and execution excellence. INQ

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