AEV reports 34% increase in first half net income
Aboitiz Equity Ventures, Inc. (AEV or the “Company”) ended the first half of the year with a consolidated net income up 34% year-on-year (YoY) to P10.5 billion from P7.8 billion. This translates to P1.89 in earnings per share. Power accounted for 67.1%, followed by Banking and Financial Services, Food, Infrastructure, and Land strategic business units (SBUs) with income contributions of 16.8%, 7.8%, 7.6% and 0.7%, respectively.
For the period ending June 30, 2016, the Company incurred a non-recurring gain of P100 million (versus last year’s one-time loss of P110 million), which largely resulted from the power unit’s gain on step acquisition of East Asia Utilities Corporation. Adjusting for these one-offs, AEV’s core net income amounted to P10.4 billion, 31% higher YoY.
“Our two-pronged strategy of organic growth in our existing businesses and diversifying our income streams from our fifth leg—infrastructure-related businesses—is on track and paying off. We are very pleased with the strong contribution of our cement business and the prospects of infrastructure moving forward,” said Erramon I. Aboitiz, AEV President and Chief Executive Officer.
Strategic Business Units
Aboitiz Power Corporation (AboitizPower) ended the first half of the year with an income contribution to AEV of P7.7 billion, registering a 24% increase compared to the previous year’s P6.2 billion. AboitizPower’s bottomline performance recorded a 24% YoY increase, from P8 billion to P10 billion. When adjusted for one-off items, the Company’s core net income for the first semester of 2016 amounted to P9.8 billion, up by 20% YoY.
The power generation business group accounted for 82% of earnings contributions from AboitizPower’s business segments, recording an income share of P8.1 billion, up 27% YoY. Netting out one-off items, AboitizPower’s generation business amounted to P8.2 billion for the period, which was 25% higher than last year.
As of semester end, AboitizPower’s attributable capacity sales rose by 13% YoY from 1,795 MW to 2,020 MW. Therma South’s new capacity contribution primarily accounts for the increase in capacity. Magat Dam’s better water inflow, particularly in June, further augmented capacity sales.
Meanwhile, the power distribution group’s earnings share for the first semester of 2016 grew by 3%, from P1.7 billion to P1.8 billion. Total attributable electricity sales increased by 7% YoY, from 2,338 GWh to 2,512 GWh. The sales growth was driven by Visayan Electric Co., Inc. (VECO), Davao Light & Power Co., Inc., and San Fernando Electric Light and Power Co.
Banking & Financial Services
Union Bank of the Philippines and its subsidiaries posted P1.9 billion of income contribution to AEV, registering a 121% increase compared to previous year’s P866.7 million. The surge in net income is primarily attributed to the robust growth in core recurring income. This translated to return on average equity and return on average assets at 15.6% and 1.9%, respectively.
AEV’s non-listed food subsidiaries, Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and Pilmico International Pte Limited, posted an P885 million income contribution to AEV, remaining relatively flat YoY during the first half of 2016 compared to the previous year.
Feeds Philippines’ bottomline improved by 36% to P436 million from last year’s P321 million on account of strong volume and lower raw material prices. Despite depressed flour prices, Flour’s net income for the first half of the year was 3% higher YoY at P366 million from last year’s P357 million with increased volume and better by-product performance.
On the other hand, Feeds Vietnam and Farms both reported a drop in net income contributions, largely driven by lower prevailing selling prices. Feeds Vietnam fell to P24 million with the decline in volume due to decreased demand from external customers; income over ingredient cost likewise dropped on account of the decrease in selling prices, reducing net income by 68% YoY from last year’s P75 million. Despite the increase in Farms‘ volume attributable to the sow level expansion, the significant drop in live hog prices against last year resulted to the 55% decrease in first half performance of net income to P59 million from last year’s P131 million.
AEV’s land subsidiary, Aboitiz Land, Inc.’s (AboitizLand) income contribution to AEV for the first half of 2016 decreased by 60% YoY to P85 million from last year’s P213 million.
AboitizLand posted revenues of P1 billion, 16% lower YoY from last year’s P1.2 billion. The drop was driven by the 63% decrease in revenues of the Industrial BU due to the lower LiMA Land sales as prospective locators held off commitments in light of the recent national elections, but still mitigated by the residential and commercial BUs recording revenue growth of 8% and 16% YoY, respectively, supported by their respective markets’ growing interest.
AEV’s infrastructure unit, Republic Cement and Building Materials, Inc. (RCBM) posted an income contribution to AEV of P869 million for the period. It started contributing mid-September last year.
RCBM had a strong performance in the first half of 2016 with cement demand supported by growth in commercial and other non-residential spaces, sustained demand in the residential sector and sustained government infrastructure spending.