AEV Earns P4.9 billion in First Quarter Profits
Aboitiz Equity Ventures, Inc. (AEV or the Company) ended the first quarter of 2014 with a consolidated net income of P4.9 billion, recording a decline of 29% year-on-year (YoY). This translates to an earnings per share of P0.88 for the period in review.
For the first quarter of 2014, AEV booked a non-recurring income of P470.6 million. The bulk of this was due to the recognition of a gain amounting to P634.0 million resulting from the sale of some assets as part of the Company’s business rationalization strategy. However, this was partially offset by the foreign exchange loss on the revaluation of consolidated dollar-denominated loans and placements amounting to P163.4 million. Adjusting for these one-offs, AEV’s core net income amounted to P4.4 billion, which is 20% lower than last year.
Out of the total earnings contributions from the Company’s strategic business units (SBUs), Power accounted for 73.0% while the income contribution of the Banking, Food and Land Development SBUs were at 16.6%, 7.7%, and 2.8% respectively.
“Since our public listing in 1994, we have created substantial value for our shareholders, as proven by the 61% compounded annual growth rate in Total Return to Shareholders over the last five years. We attribute this success to our focused strategy of sticking to our core competencies, executing defined strategies, and the unwavering commitment of a world-class team,” said Erramon I. Aboitiz, AEV President and Chief Executive Officer.
Strategic Business Units
Aboitiz Power Corporation (AboitizPower) ended the quarter with an income contribution of P3.2 billion, registering a 9% decrease when compared to the previous year’s P3.5 billion. When adjusted for non-recurring items, the Power SBU recorded a 3% YoY decrease in its earnings share, from P3.5 billion to P3.4 billion. (Please refer to AboitizPower’s press statement for details)
Union Bank of the Philippines’ (UnionBank) income contribution for the period in review decreased by 59% YoY, from P1.8 billion to P730.6 million.
Net interest income rose by 25% to P2.6 billion, anchored on the robust expansion in earning assets coupled with the continuous reduction in average costs of interest-bearing liabilities. On the other hand, total other income fell by 66% to P1.8 billion largely in view of the exceptionally higher trading gains posted during the first quarter of 2013, which accounted for 55% of the total gains. Service charges, fees and commissions went up by 73% to P0.9 billion, driven by the strong growth in consumer loans. Total operating expenses decreased by 24% to P2.3 billion, mainly on lower salaries and employee benefits, and trust fund contribution on the reduced level of pre-need sales.
UnionBank’s resources breached the P400-billion mark to settle at P411.4 billion as of end-March 2014 from P396.1 billion as of end-December 2013. Total deposits grew by P30.7 billionto P328.9 billion, more than offsetting the decline in borrowings. On January 14, 2014, the Bank exercised its right to redeem the P3.75 billion unsecured subordinated notes upon its non-qualification as Lower Tier 2 capital with the effectivity of Basel 3 beginning 2014. Common Equity Tier 1 and total capital adequacy ratio were at 10.9% and 11.5%, respectively, remaining above the minimum requirements set forth under the revised capital standard.
“Despite the drop in net income, UnionBank continues to yieldan attractive ROE (Return on Equity). While it remains well-capitalized even under a Basel III regime, the principal shareholders have set the motion to further boost the Bank’s capital structure through its recent moves to increase its authorized capital,” Aboitiz noted.
AEV’s non-listed food subsidiary, Pilmico Foods Corporation (Pilmico), posted a 4% YoY increase in its first quarter income contribution in 2014, from P325.2 million to P338.6 million. The movement was primarily due to the strong performance of the Flour division, which registered a net income of P185.6 million year-on-year as a result of the improvement in margins. Meanwhile, the Farms business logged in a 19% growth in income contribution as a result of increase in volume sales and average selling price. On the other hand, the Feeds division posted a weaker performance during the first quarter as higher input costs continued to be a challenge.
AEV’s property SBU, AboitizLand, Inc. (“AboitizLand”), registered YoY growth of 181% in its net income contribution for the quarter from P43.1millionto P121.1 million. Total revenues for the period amounted to P664.4 million.
The growth was mainly due to the 100% consolidation of the recently acquired LiMA Land, Inc. This resulted to a shift to the industrial segment as the main contributor to revenues, now with a 54% share. Meanwhile, the residential segment grew as well by 80% to P293.4 million, contributing 44% of revenues. The rest of the revenues, amounting P13.2 million, came from the commercial and property management segments.
AboitizLand looks to grow further as it takes on more exciting projects. It has allotted P5.4 billion for capital expenditures for the year for land acquisition and project development.
“AboitizLand continues to exhibit impressive growth as demand for property—both in the industrial and residential sectors—remains robust. With the recent acquisition of LiMA Land, we have taken the first step in our expansion strategy in Luzon and ultimately towards making AboitizLand a national player,” Aboitiz said.
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.