AEV income clipped by lower prices

Aboitiz Equity Ventures Inc. posted a three percent decline in its 2011 net profit to P21.2 billion due to the lower selling prices and net generation recorded by its flagship power business.

Excluding non-recurring items, AEV’s core earnings last year amounted to P20.8 billion, 5 percent lower than the previous year’s, the company disclosed to the Philippine Stock Exchange.

These results translate to P3.84 in earnings per share for the Aboitiz family-led conglomerate. Power business continued to account for the lion’s share of its income at 78 percent, followed by the banking and food units with income contributions of 16 percent and 6 percent, respectively.

“The strength of our power business lies in our diversified, complementary and competitive portfolio of generating assets. We have also been able to mitigate earnings volatility through our contracting strategy. We are confident that this, coupled with our experienced management team, provides us with the ingredients necessary to thrive in a more challenging environment with the onset of more competition, open access, and the full implementation of WESM (Wholesale Electricity Spot Market) nationwide,” said AEV president Erramon Aboitiz.

Aboitiz reported that AEV’s banking group had likewise performed very well in 2011.

“UnionBank’s growth has been above industry averages which mean we are expanding our market share. CitySavings has aggressively pursued expansion in Luzon, confident that it will be able to replicate the success it has in the Visayas and Mindanao,” Aboitiz said.

In the fourth quarter of 2011 alone, AEV’s consolidated net income amounted to P5.1 billion, 2 percent higher year-on-year.  Adjusting for non-recurring items, AEV closed the quarter with a 2 percent decline in core net income to P5.3 billion compared to a year ago.

AEV’s full-year results included non-recurring items broken down as follows:

• a net loss of P123 million due to the revaluation of consolidated dollar-denominated loans and placements;
• a P266-million gain, given a power subsidiary’s revenue adjustment that resulted from a favorable ruling by the industry regulator involving its ancillary services tariff structure;
• a P163-million gain as an associate company in the power business recovered costs relating to its fuel importation;
• a P149-million gain arising from the reversal of an accrued expense relating to a power subsidiary’s power contract; and
• a P89-million one -time fee relating to loan pre-terminations.

Aboitiz Power Corp. ended 2011 with an income contribution of P16.5 billion versus last year’s P19.1 billion. When adjusted for non-recurring items, the company recorded a 14 percent reduction in its earnings share to P16.1 billion.

The income contribution of AEV’s banking units last year improved by 31 percent year-on-year to P3.4 billion. Union Bank ended the period with an earnings contribution of P2.9 billion, up by 26 percent year-on-year.