AEV first half earnings fall on lower contributions from units
Aboitiz Equity Ventures Inc. (AEV) saw profits slow in the first six months of the year as it pursued a major business “transformation” into a technology-focused conglomerate.
The Aboitiz family-led holding firm said on Friday profits from January to June dropped 12 percent to P11.8 billion on lower contributions from key power, banking and food subsidiaries.
The decline also followed a decision last year to cut its stake in flagship energy unit, Aboitiz Power Corp., from 77 percent to 52 percent via a strategic deal with JERA Asia Private Ltd.
“From an investor’s standpoint, our primary objective is to make sure these transformations produce a ‘techglomerate premium’ wherein the synergy between all the group’s components is strengthened to the point where the group as a whole becomes much more valuable than the sum of its parts,” Aboitiz Group president and CEO Sabin Aboitiz said in a statement.
During the semester, power accounted for 52 percent of income while financial services contributed 31 percent. Real estate, infrastructure and food contributed 12 percent, 4 percent and 2 percent, respectively.
AEV said AboitizPower’s income contribution to the parent fell 34 percent to P5.2 billion.
AboitizPower’s net income at end-June dropped 2 percent to P10 billion. Business was lifted by nonrecurring gains on Therma Luzon Inc.’s hedge and the appreciation of the US dollar.
During the same period, income contribution from the generation and retail electricity supply businesses, which accounted for 87 percent of total income contribution from AboitizPower’s business segments, totaled P10.7 billion, up 6 percent.
The distribution business recorded an income share of P1.5 billion, down 34 percent.
Union Bank of the Philippines’ contributions fell 26 percent to P3.1 billion due to the absence of extraordinary trading gains.
Net interest income jumped 15 percent to P17 billion while fees and other income hit P4.8 billion. Loan loss expenses also fell 49 percent to P1.6 billion.
AEV’s food group also booked an 84-percent drop in contributions to P194 million.
The group is comprised of Pilmico Foods Corp., Pilmico Animal Nutrition Corp., and Pilmico International Pte. Ltd., which includes Gold Coin Management Holdings Pte. Ltd.
Its earnings before interest, taxes, depreciation and amortization jumped 23 percent to P3.1 billion. This was due to “margin recoveries from its agribusiness, farms and commodity trading segments.”
The property development group, led by Aboitiz Land Inc., recorded a net income of P1.2 billion, up over 200 percent.
“The residential business had a significant increase in its revenue contribution year-on-year due to increased construction activity and significant positive site accomplishments in a number of projects,” AEV said.
Lastly, Republic Cement & Building Materials saw contributions to AEV fall 87 percent to P177 million.
“This was primarily due to lower market demand for cement due to increases in the prices of steel and other construction materials, pre-election construction ban and post-election transition,” the holding company said.
