Aboitiz holding firm’s 9-month profit lifted by strong US dollar

The Aboitiz family conglomerate Aboitiz Equity Ventures Inc. (AEV) earned a P5.3-billion windfall thanks to the surging US dollar, boosting profits by 9 percent to P21.4 billion in the January to September period.

This helped earnings grow despite smaller contributions from its core power, banking, food and infrastructure divisions.

Without the one-off gains, AEV’s profits would have dropped 17 percent at end-September this year, the company said in a stock exchange filing on Friday.

The nonrecurring income was mainly due to foreign exchange gains from the “revaluation of US dollar cash and liquid financial instruments,” the conglomerate said.

The dollar is on a tear in 2022 as the US Federal Reserve aggressively raised interest rates to slow accelerating consumer prices.

During the period, AEV saw contribution from power fall after reducing its ownership in flagship firm, Aboitiz Power Corp.

Union Bank of the Philippines’ earnings were also down given the absence of “extraordinary” trading gains in 2021 while the food business was hit by foreign exchange losses.

Nevertheless, AEV president and CEO Sabin Aboitiz underscored the company’s ongoing business transformation program that he said would place it on a more sustainable path moving forward.

“We will continue to invest substantially and strategically in innovation, but it has always been our investment in people that have yielded the most returns,” Aboitiz said in a statement.

Challenges

The company’s power business accounted for 58 percent of earnings during the nine-month period, followed by financial services at 29 percent and real estate at 10 percent with the remainder mainly driven by food and infrastructure.

Aboitiz Power profits alone jumped 24 percent to P19.5 billion, which was lifted by a P1.2-billion nonrecurring gain from the appreciation of the dollar. Removing this, net income would have been 17-percent higher to P18.3 billion.

UnionBank’s net income shed 6 percent to P10.1 billion on lower trading gains. However, removing these, net revenues were up 37 percent to P36 billion. Loan loss provisions were also down 43 percent to P2.3 billion as asset quality improved.

AEV also noted challenges across its food group, comprised of Pilmico Foods Corp., Pilmico Animal Nutrition Corp. and Pilmico International Pte. Ltd.

Contributions here fell 83 percent to P260 million due to weaker margins and foreign exchange losses.

Property arm, Aboitiz Land Inc., booked a 167-percent profit surge to P1.7 billion.