AEV registers 44% growth in net income for January to September 2016

Aboitiz Equity Ventures, Inc. (AEV) reported a 44% year-on-year (YoY) increase in its consolidated net income to P17.1 billion from P11.9 billion for the first nine months of the year. This translates to P3.05 in earnings per share. Power accounted for 63%, followed by the banking and financial services, food, infrastructure, and land strategic business units (SBUs) with income contributions of 22%, 7%, 7%, and 1%, respectively. Core net income amounted to P17.1 billion, 37% higher YoY.

“Our efforts to pursue organic growth, invest in new assets, and strengthen operational capabilities have resulted in strong profit contributions from our power, banking and financial services, and infrastructure business units. As we ride on the tailwind that a growing economy brings, we will continue to build a sustainable, responsible, and industry-leading enterprise,” Erramon I. Aboitiz, AEV President and Chief Executive Officer, said.

Strategic Business Units

Aboitiz Power Corporation (AboitizPower) ended the first nine months of the year with income contribution to AEV of P11.6 billion, registering a 24% increase when compared to the previous year’s P9.4 billion.

On a stand-alone basis, AboitizPower’s bottomline year-to-date (YTD) increased 24% YoY, from P12.2 billion to P15.1 billion. Adjusting for non-core items, the company’s core net income for the first nine months of 2016 amounted to P15.2 billion, up by 17% YoY.

The generation business accounted for 80% of earnings contributions from AboitizPower’s business segments, recording an income share of P12 billion for the first nine months of 2016, up 26% YoY. The growth was largely driven by Therma South’s new contribution. Netting-out one-off items, the income contribution of AboitizPower’s generation business amounted to P12.5 billion for the period, which was 20% higher than last year.

The power distribution group’s earnings share for the first nine months of 2016 increased by 11%, from P2.6 billion to P2.9 billion. Total attributable electricity sales increased by 8% YoY, from 3,546 gigawatt-hours (GWh) to 3,818 GWh.

Banking & Financial Services
Union Bank of the Philippines (UnionBank) and its subsidiaries posted P4 billion in income contribution to AEV during the first nine months of 2016, registering a 178% increase compared to previous year’s P1.4 billion.

On a stand-alone basis, UnionBank and its subsidiaries posted P8.2 billion in net income during the first nine months of 2016, more than double the earnings posted for the same period a year ago of P3 billion. The surge in net income is primarily attributed to the robust growth in net interest income and fees coupled with the profits from the sale of securities.

AEV’s non-listed food subsidiaries, Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and Pilmico International Pte Limited posted P1.4 billion income contribution to AEV for the first nine months of the year, slipping by 1% compared to the previous year.

Feeds Philippines was the sole gainer across all divisions. Feeds Philippines’ bottomline increased by 18% to P675 million on the back of higher volume and lower raw material prices. Flour, Feeds Vietnam, and Farms all reported a drop in net income contributions mainly driven by lower prevailing selling prices.

AEV’s land subsidiary, Aboitiz Land, Inc.’s (AboitizLand) income contribution to AEV as of end September 2016 decreased by 40% YoY to P149 million from last year’s P249 million. The 40% decline in net income was mainly due to the increase in operating expenses as the company continued to grow its team to become a national real estate player.

AEV’s infrastructure unit, Republic Cement and Building Materials, Inc. (RCBM) posted an income contribution to AEV of P1.3 billion for the period in review.  It started contributing mid-September last year.

Our RCBM investment performed well in the first nine months of the year, on the back of steady demand. In the medium to high rise segment, building construction was fueled by strong demand in office and commercial spaces.  In the individual home builders segment, steady residential sector construction and repairs were supported by overseas Filipino worker remittances, low-interest mortgage lending environment and a continued consumption-driven economy.  Lastly, in the roads and infrastructure segment, which includes roads and other public facilities, government and election-related spending in projects drove solid growth in our volumes.

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