Aboitiz Equity Ventures posts Php 21 billion income in 2013
Aboitiz Equity Ventures had its share of triumphs and challenges in 2013. Income declined by 12% in 2013 to Php 21 billion from Php 24 billion the previous year, while earnings per share (EPS) dropped to Php 3.81 from Php 4.34 the year before.
Still, Return-on-Equity remained very healthy at 25%.
Of the company’s total earnings in 2013, the Power unit accounted for 72% contributing P14.2 billion, Unionbank, 21% at Php 4.1 billion, food unit , Pilmico, 6% at Php 1.3 billion, while AboitizLand made its first full year contribution at less than 1%, providing Php 273 million.
AboitizPower’s bottomline declined by 24% to Php 18.6 billion mainly due to lower sales for ancillary services and higher fuel costs for Pagbilao and the Tiwi-Makban facilities.
2014 will still remain challenging for the power business, due to the expiration of the income tax holiday for the Pagbilao and Magat plants, which will constrain earnings growth potential.
Despite this, AboitizPower continues to expand and build additional capacity as it looks at the long term horizon. The power unit is investing up to P80 billion in greenfield and brownfield projects across the country. This is just part of the ambitious plan to expand the power generation capacity by 2,000 MW over the next five years.
The company is also looking at more renewable energy projects, and hopes to add solar energy into its renewable energy portfolio to supplement its hydro electric and geothermal projects.
“Power continues to be an important business for the Group. As the economy continues to grow, so will the demand for power ; hence our continued commitment to further invest in the appropriate power technologies to remain relevant always”, Erramon Aboitiz, AEV President and CEO said.
UnionBank, ended the year with an earnings contribution of P4.1 billion, up by 7%. This was on the back of higher net interest income and hefty trading gains booked during the period.
Net interest income grew by 22% to P8.9 billion on account of the sustained expansion of earning assets. The expansion was largely attributable to the significant increases in loans, investment securities and SDA.
Meanwhile, non-interest income increased by 17%, principally due to higher service charges, fees and commissions.
The bank maintained its ROE at 18%, while ROA for 2013 remained healthy at 2.6%. The bank’s loan book ended the year at P142 billion, registering a 7% expansion from 2012.
Looking forward, UnionBank will continue to strengthen its culture to further enhance employee and customer engagement.
The transfer of ownership of City Savings Bank to UnionBank is also expected to extract greater synergies and take advantage of UnionBank’s capabilities.
Pilmico’s net income dropped by 4% to Php 1.3 billion due to increased competition from imported flour and volatile prices of its raw materials.
Looking ahead, the food unit will grow feed sales by supporting backyard and medium-scale swine farms to raise market hog volume and will strengthen its market impact on the game fowl sector through value-added services for its premium product.
Income is expected to improve as it explores other markets and looks at international opportunities as a result of the upcoming ASEAN integration. In December 2013, Pilmico already completed its first flour shipment to Vietnam.
AboitizLand registered a net income contribution of P274 million in 2013, representing its first full year contribution since being acquired back in November 2012.
A combination of new developments and property expansion steered the company to a strong performance in 2013. From its first subdivision development in Cebu, AboitizLand’s portfolio has increases to 14 residential and three industrial communities.
In October, AboitizLand purchased 60% of LiMA Land, with the remaining stake acquired just this February 2014. This has added the 485-hectare Lima Technology Center into the portfolio.
The acquisition of LiMA Land is a major step towards AEV’s objective of making AboitizLand a national player. With three industrial parks in its portfolio, the Aboitiz Group is confident that these economic zones will greatly boost revenue and become a major growth vehicle for the company.
Meanwhile, the 50-50 joint venture agreement between AboitizLand and Ayala Land was signed in Jan 2014, which will allow AboitizLand to offer a full range of real estate formats in Metro Cebu. As a start, the tie up is set to develop and operate a 15-hectare city center in Barangay Subangdaku, Mandaue City. The mixed-used development is targeted to be launched in 2015. We will house residential units and commercial spaces with retail and office components. We will spend most of 2014 planning the project and will officially introduce it next year. This will be an important addition to the real estate industry in Cebu.
AEV launched its newest business unit, Aseagas in 2013. It is the country’s first liquid bio-methane fuel plant, which will convert organic waste to renewable fuel for the transportation industry.
As it moves towards full operation, the company signed an effluent supply agreement with Absolut Distillers, Inc. and secured a site for the construction of its production plant in Batangas.
First Quarter 2014
For the first three months of 2014, AEV reported a net income of P4.9 billion, 29% lower than the previous year. This translated to an earnings per share (EPS) of P0.88.
Of the total contribution from AEV’s subsidiaries, the power group provided 73%, equivalent to P3.2 billion, recording a 9% decline year-on-year. The adverse impact on earnings was mainly attributable to the higher fuel cost brought about by the implementation of the Geothermal Resource Supply Contract for the Tiwi-Makban facilities.
The banking group brought in P731 million, equivalent to 17% of total earnings contribution to AEV, a decrease of 59% over the same quarter in 2013. This is attributed to the exceptionally higher trading gains posted in the same period last year, which accounted for 55% of the total gains.
Meanwhile, the food group contributed P339 million, 4% higher than the same period last year, mainly due to the strong performance of the Flour and Farms divisions, which helped offset the Feeds division’s weaker performance.
Lastly, the real estate group registered a 181% growth in its net income contribution to P121 million, due to the strong growth in residential sales and the 100% consolidation of recently acquired Lima Land.
The decline for the first quarter of 2014 would have been lower if not for the non-recurrence of the gain that AEV recognized as a result of the sale of its stake in City Savings Bank during the same period last year.
For 2014, the company expects income to remain modest, due lower earnings from its power unit. Despite this, the company’s balance sheet remains strong and capable to look at new investment opportunities in the horizon. As of December 2013, AEV’s total assets increased by 11% to almost P247 billion.
“Our company remains keen in pursuing Public-Private Partnership projects, such the Cavite-Laguna Expressway project, which AboitizLand has already pre-qualified for. We will also harness our technical expertise in hydroelectric power to build the country’s first and only bulk water system with a fully renewable energy powered water treatment facility in Davao”, added Aboitiz.
Aboitiz Equity Ventures (AEV) listed in the Philippine Stock Exchange (PSE) in 1994 as the public-held holding company of the Aboitiz Family. It has major investments in power, banking, food, and land. Since its IPO, AEV has been recognized by various local and international surveys and publications as among the Philippines’ best managed companies. AEV has likewise received numerous awards for its corporate governance practices.