Aboitiz Equity Ventures, Inc. (AEV) posted a consolidated net income of P5 billion for the first quarter of 2016—up 24% year-on-year versus 2015—driven by the strong performance of its power, banking and financial services, and infrastructure business units (BUs). Power accounted for 70% of earnings, followed by banking and financial services (15%), food (7%), infrastructure (7%), and land (1%). Core net income for the quarter stood at P4.9 billion, 19% higher year-on-year (YoY).

“The contribution from our cement business is a clear manifestation of the momentum in our thrust to create a fifth leg for AEV. We expect strong growth in cement and the full-year recognition of income from Republic Cement to positively impact AEV’s earnings this year,” Erramon I. Aboitiz, AEV President and Chief Executive Officer, said.

“We are also very pleased with the growth in contributions coming from our power and banking and financial services units,” Aboitiz added.

Strategic Business Units

Power

Aboitiz Power Corporation (AboitizPower) contributed P3.9 billion to the Group’s income, 15% higher versus 2015’s P3.3 billion, while income performance recorded a 15% YoY increase from P4.3 billion to P5.0 billion. Core net income for the first quarter of 2016 amounted to P4.8 billion, up by 10% YoY.
For power generation, capacity sales rose by 12% to 2,014 megawatts (MW) from 1,804 MW due to additional capacities from Therma South, Inc. and higher available capacities from SN Aboitiz Power (SNAP) Group’s hydro power plants. For power distribution, attributable electricity also rose by 8% to 1,201 gigawatt-hours (GWh) from 1,111 GWh a year ago, driven by higher electricity sales across all customer segments.

Banking & Financial Services

Union Bank of the Philippines (UnionBank) and its subsidiaries posted P837 million in income contribution during the first quarter of 2016, more than double the contribution for the same period a year ago. The net income surge is primarily attributed to the strong growth in net interest income and fees, translating to return on average equity and return on average assets at 12.8% and 1.6%, respectively. Net interest income and fees, which accounted for 90% of total income, jumped by a third to P4.5 billion.

Food

AEV’s non-listed food subsidiaries (Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and Pilmico International Pte Limited) posted a 6% decline YoY in its first quarter income contribution amounting to P389 million from P416 million. Feeds Philippines’ bottomline improved by 39% to P203 million due to strong volume and lower raw material prices while Feeds Vietnam, Flour, and Farms all reported a drop in income contributions, largely driven by lower prevailing selling prices.

Land

AEV’s land subsidiary, Aboitiz Land Inc.’s (AboitizLand) total earnings and income contribution to AEV for the first quarter decreased by 38% YoY, from P80 million to P50 million, with revenues declining by 13% to P500 million from P576 million in 2015, due to revenue recognition under the percentage-of-completion method, which recorded a slower pace of construction in the first quarter of 2016 compared to the same period last year, and higher operating expenses. The residential, industrial, and commercial BUs brought in revenues of P282 million (56%), P186 million (37%), and P32 million (6%), respectively.

Infrastructure

AEV’s infrastructure company, Republic Cement and Building Materials, Inc. (RCBM), which started contributing mid-September last year, posted an income contribution of P391 million for the period in review.

RCBM had a strong first quarter performance, with cement demand supported by: strong foreign direct investments in the business process outsourcing sector, which helped fuel demand for medium- to high-rise office space; overseas Filipino workers remittances, which helped fuel demand for residential homes; and increasing government infrastructure spending.