AEV profit slumped 54% in Q1 on slew of challenges
The Aboitiz family-led conglomerate, Aboitiz Equity Ventures Inc. (AEV), reported a sharp drop in earnings in the first quarter of 2022, reflecting the impact of one-time charges, inflationary pressures and its ongoing efforts to rebalance its business portfolio that was once dominated by energy sales.
In a stock exchange filing on Wednesday, AEV said net income from January to March fell 54 percent to P3.9 billion while core profit, which removed the impact of nonrecurring foreign exchange gains, fell 64 percent to P3.2 billion.
AEV said the drop was worsened by other charges, business interruption claims and the impact of Typhoon “Odette.”
Finally, the company referenced its “transformation strategy” that included the sale of a 27-percent stake in subsidiary Aboitiz Power Corp. to Tokyo-based Jera Co. for $1.58 billion in the latter part of 2021.
This brought down AEV’s stake in the power subsidiary from 77 percent to 52 percent.
Delay in construction
Aboitiz Power saw earnings fall 53 percent to P2.9 billion, mainly due to charges arising from the delay in the construction of the GNPower Dinginin Ltd. Co. coal project and business interruption claims from plant outages.
AEV said power now accounted for 41 percent of its “total income.” Another 36 percent came from banking arm, Union Bank of the Philippines, while the food group, comprised of Pilmico Foods Corp., Pilmico Animal Nutrition Corp. and Pilmico International Pte. Ltd., contributed 14 percent.
The remainder came from real estate arm AboitizLand Inc. and the infrastructure group’s Republic Cement & Building Materials Inc., with each accounting for an equal 4 percent of the parent firm’s income.
In its filing, AEV said UnionBank’s contribution fell 44 percent after the lender reported that first quarter net income plunged 45 percent to P2.6 billion.
This was due to the absence of “extraordinary trading gains,” which were recorded in the first quarter of 2021. UnionBank said recurring income was up 21 percent in 2022 due to interest income earnings and fees.
The food group saw a similar drop in the first quarter of 2022. Its agribusiness segment shed 37 percent in net income to P211 million on foreign exchange losses while the food and nutrition group tumbled 35 percent to P250 million from tax adjustments and shrinking margins amid higher wheat costs.
Profit growth
The farm division posted “strong” profit growth during the same period, AEV said.
Meanwhile, AboitizLand saw net income gain 48 percent to P390 million on higher sales while Republic Cement swung to a loss in the first quarter as higher construction material costs depressed demand.
“As new global disruptions emerge with the continuing conflict in Ukraine, we are prepared to deal with uncertainties through our agile and resilient mechanisms and mindsets that were deeply embedded in our organization long before the pandemic,” AEV president Sabin Aboitiz said in a statement on Wednesday.
“As always, these highly effective defense mechanisms are driven for and by our people first, and will be further enhanced at an unprecedented scale and speed by our great transformation into a conglomerate that operates with the sensibility of a startup, using innovation, technology and fast-forward thinking to turn disruption into opportunity,“ he added.
