Aboitiz keeps ‘economic engines’ running toward recovery

Aboitiz keeps ‘economic engines’ running toward recovery

Over a  year into the Covid-19 pandemic, the Aboitiz Group said it is ready to take on a renewed yet prudent optimism towards recovery while proactively managing risks by keeping its “economic engines running.”

Despite the setbacks last year, its strategic business units (SBUs) which operate in various critical industries including power, financial services and banking, food, infrastructure, and land, found ways to innovate to continue operating with reduced budgets ー about a third at that ー taking into consideration the  impact on the organization’s future growth.

Aboitiz Group President and Chief Executive Officer Sabin M. Aboitiz said that a decisive and strong leadership played a huge part in properly assessing the challenges, risks, and laying out well-thought-out realistic plans that would sustain the business under the new normal.

“The full extent of its impact remains to be seen even as our economy is beginning to see marginal gains. While the Aboitiz Group is optimistic about recovery, we continue to closely observe emerging risks and manage the unintended consequences of some of our short-term decisions — for example, cutting down our capex and postponing some projects, with just enough to keep our economic engines going in preparation for recovery,” Aboitiz disclosed, sharing how the conglomerate laid out its plans when the health crisis hit.

With a more positive outlook for 2021, the Aboitiz Group increased its capex by 69% from 2020’s P29 billion spend to P48 billion.

“Our businesses are ready to support gradual economic recovery in the countries where we operate, while proactively managing  risks. The resources we have spent building our digital infrastructure and strengthening our business continuity plans have paid off.  We will continue to deliver on our  commitments to stakeholders, even as our teams continue to work from home and through flexible work schemes.

“We are entering what we believe to be a time of recovery not just for the company, but for the whole world. We are taking with us the lessons we have learned in 2020, and approach 2021 with prudent  optimism,” Aboitiz stressed.

And this renewed enthusiasm is becoming more palpable as the company, which supplies about 20%  of the country’s population through its critical businesses continues to rise above the challenges and  roll out projects and new initiatives at the beginning of the year.

“The way we lead our organization will determine the future of everyone who depends on us. We supply close to 20% of the country’s power and distribute electricity to major cities across the regions; we supply our partners in food that provide close to 20% of the flour and feeds for the bread and pork we eat; we produce close to 20% of the cement used in building our country,” Aboitiz said.

He added that Aboitiz’s banking and financial services business unit plays a major role in leading the digitalization of the industry, while land and infrastructure teams are also headed towards the ‘20%’ number.

“So it’s safe to say that close to 20% of the country is relying on us,” Aboitiz said.

 

Power

2021 is a significant year for its power business as it marks the beginning of AboitizPower’s 10-year growth strategy. The company is looking to significantly grow its Cleanergy portfolio, as it aims for a 50:50 balance between its renewable and thermal capacities by 2030.

Currently, AboitizPower together with its partners is the Philippines’ largest owner and operator of renewable energy based on installed capacity. In the next 10 years, it is targeting to double its fleet size, with focus on renewable energy both domestically and internationally while selectively building baseload capacities to serve the country’s increasing energy demand.

With this growth strategy, heavily driven by digital transformation and backed by strong environmental, social, and governance standards and practices, AboitizPower is well equipped to support the country’s growth and recovery from the impact of COVID-19. The company is committed to ensuring that the much needed power supply is delivered to customers and communities in a reliable, responsible, and sustainable manner.

Banking and Financial Services

Despite the global effects of COVID-19 particularly in the banking industry, UnionBank’s disclosed 2020 Financial Results underscore the strategic importance of its digital transformation almost five years ago, as it is now harvesting its strategic rewards.

From the original target of attracting a million new customers, the bank was able to attract 2.4 million new accounts in 2020 with a large portion coming from digital account opening. It is the only Top-10 universal bank in the country that was able to introduce during the crisis period, an account which can be fully-opened without having to go to any physical branch, which resulted in large customer adoption.

As of January, the bank breached two million customers transacting via its app UnionBank Onlineー a quadruple increase from last year.  Of these two million, 25% opened their accounts in a purely digital manner. Corporate customers using the bank’s ‘The Portal’ meanwhile tripled to over 16,000 as of January 2021.

As the bank lines up new features in its digital channels and Tech Up, especially more of the underbanked and unbanked countrymen, it aims to move full throttle in 2021 with the end in view of achieving a bank of enduring greatness.

 

Food

The Food Group’s strategy to ensure a sufficient level of raw materials to support customer demand and maintain an unhampered supply chain amid the pandemic helped keep its operations going.

To help boost the country’s pork supply chain, Pilmico Foods Corp. continues with its investments in its swine raising business and modernizing food production through its Triple A-rated meat processing plant, Tarlac Meat Masters. As a robust support system to the pork supply chain, the facility brings world-class processes, innovative technology and solutions, and the highest standards of food safety and traceability to produce uncompromised quality pork meat cuts. The Food Group will work with other raisers in the industry and give them access to a facility that will help maximize their recovery and profit.

 

With the limitations of the quarantine, Pilmico is leveraging on its presence in e-retail markets via its online shops such as thegoodmeat.ph and The Good Meat flagship store in Lazada Fresh to provide its customers with convenient and safe way to buy quality meats, as well as pet food through Shopee and Lazada.

Infrastructure

Aboitiz InfraCapital will focus on investing in projects that will spur economic growth through better and integrated infrastructure facilities and services. This year,  the company has allocated about P2.5 billion to ramp up the deployment of telcos’ small cells into its poles and the construction of macro towers, in support of the government’s thrust to increase digital connectivity in the country.

Despite the challenges brought about by COVID-19, Apo Agua is ramping up construction to complete the Davao City Bulk Water Supply Project (DCBWSP). Once operational, the DCBWSP will provide over 300 million liters of safe water daily to more than one million Davaoeños, supporting the city’s rapid growth.

As the Aboitiz Integrated Economic Centers continue to attract international and local locators from various industries, the company is investing PhP 2.8 billion for land acquisition and redevelopment efforts. The expansion is well under way, which is expected to play a key role in the growth of regional centers and our country’s economic recovery, providing  up to 25,000 jobs for nearby communities in Batangas and Cebu. Fully constructed commercial lots at LIMA Estate in Lipa will be available for sale in April. LIMA Estate is a 700-hectare Philippine Economic Zone Authority (PEZA) – registered economic zone that is home to 127 industrial locators, 167 retail and restaurants spaces, a 138-room four-star hotel, a transportation hub, over 2,000 households, and more than 58,000 employees.

Land

As it transitions to the new normal, AboitizLand has realigned its strategies and organization to build on its digital initiatives and make the customer journey as seamless as possible. It has pioneered the end-to-end home buying platform and through this hybrid strategy of digital augmenting in-person activities, the company hopes to further boost sales.

Property industry watchers observed a surge in demand from people moving out of condominiums for houses and lots with bigger spaces away from suffocating city lockdowns in the last quarter of 2020,  as online modes of work and study is now the new norm. This shift in home buyers’ preference would be the key driver of recovery for the ailing real estate sector. AboitizLand’s horizontal residential developments, strategically located in next-wave cities and boasting of bigger spaces and open air amenities, offer options for people who want to move out of the big cities, helping alleviate the housing supply backlog and contributing to the recovery of the property industry.

Construction

Aboitiz Construction kicked off 2021 with optimism, a new set of strategies and a comprehensive plan  that are focused on diversifying its portfolio and assuring execution excellence in all projects.

To help spur economic growth, the construction firm is focusing on infrastructure, heavy and light industrial projects and support the maintenance and services industries. This would also mean job opportunities for thousands of Filipinos.

The year 2020 brought significant challenges, yet Aboitiz Construction’s teams acted early and decisively toward strengthening financial and execution disciplines, portfolio expansion, and team member re-engagement.

Aboitiz Construction attributes its success to customer-focused support functions and team members who embrace agile, digital, and quality, while remaining deeply rooted in the company’s time-tested values of responsibility, integrity, innovation, teamwork and execution excellence.

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