The Philippines is emerging from the pandemic and other global crises with a renewed sense of hope and determination. The past year has been a test of our resilience, but it has also shown us the strength of our spirit and the power of our unity. The new administration has taken office with a commitment to working with the private sector, recognizing the vital role that business plays in driving economic growth and creating jobs. Our economy has been slowly but surely recovering with the support of a robust public-private partnership, and our business climate is more favorable than ever.
However, we must remain vigilant, as new geopolitical challenges are emerging and technological advancement continues to escalate at an unprecedented pace. The world is changing rapidly, and we must be ready to adapt and innovate if we are to remain competitive. The opportunities are vast, but we must be proactive and forward-thinking in our approach. We must embrace change and seize the moment, leveraging our strengths and investing in the future. The road ahead may be uncertain, but we are confident that with a united effort and a shared vision, we can build a better tomorrow for all.
2022 Financial Performance
For the full-year 2022, Aboitiz Equity Ventures posted net income of PHP24.8 billion, a 9% decrease from PHP 27.3 billion in 2021. This was mainly due to AEV’s reduction in equity ownership in AboitizPower from 77% to 52% effective end of 2021, as part of our transformation strategy. Power accounted for 62% of the total income contributions from AEV’s Strategic Business Units (SBU), followed by Banking and Financial Services at 27%. Income contributions from Real Estate, Food, and Infrastructure SBUs were at 11%, 0%, and -1%, respectively. As of December 31, 2022, the Company’s consolidated assets totaled PHP808 billion, a 10% increase from end-2021’s PHP733.6 billion.
The journey towards becoming the Philippines’ first techglomerate began last year, with opening our minds and believing in our Great Transformation or GT. This year, we will take the next step by embodying the characteristics and behaviors of a value-creating techglomerate and move closer to realizing our vision of a New Aboitiz. Under the leadership of our new Chief Transformation Officer, Emilie Sydney-Smith and myself, we formed a GT Network of leaders assigned to govern the GT’s Four Transformation Pillars — Cultural, Technological, Operational, and Financial — as well as defined the GT’s A+10 Behaviors that are critical us to succeed in this new era of change. Our core values have also been supercharged with new definitions to fit the GT, and included a critical reminder that everything we do is guided by our ultimate imperative, the Timely Adaptation to Change.
Our techglomerate is defined by four main functions and characteristics. Firstly, we are committed to innovating our core, ensuring that our legacy businesses remain at the forefront of technological advancements and continue to drive progress. Secondly, we are pushing the boundaries of innovation at our edge, exploring new and untapped markets and opportunities. Thirdly, we are dedicated to helping tech-up our country, government, and institutions, working in partnership to help transform our economy, bringing the benefits of innovation to not just our organization but to all Filipinos. Finally and most importantly, we aim to create a techglomerate premium, leveraging our strengths and synergies to deliver much more value to our stakeholders and drive positive change in our country. These four pillars define our techglomerate vision for the future and our commitment to leading the way in the tech-driven economy of tomorrow. Our transformation is not just a necessary step towards relevance in the future, but also a better, faster, and stronger way to advance business and communities. With the GT, we will continue to move forward with determination and drive, embracing the opportunities and challenges of this exciting new chapter in our great history.
a techglomerate premium requires a relentless focus on value creation and synergy. Our success will be determined by our ability to ensure that all our companies, including AEV, are adding significant value to each other and to the Group as a whole. This requires us to constantly identify and leverage the synergies between our products, services, technologies, and talents. By doing so, we can create a multiplier effect that elevates the value of the conglomerate beyond the sum of its parts.
By bringing companies together in a complementary way, we can create new offerings that leverage the combination of strengths, deliver greater value to our customers and shareholders, and unlock new revenue streams. By integrating technologies across all our business units, we can create new and innovative solutions that consistently deliver a competitive advantage and increase value. Creating synergies requires a culture of collaboration and open-mindedness.
Even as we federate, we must continue to be linked together by the synergies and value we create among each other. By doing so, we will be able to unlock the full potential of all our companies and drive growth for the Group as a whole. The end result will be a premium valuation for the Group, as we deliver greater value to our stakeholders and demonstrate our commitment to creating a better future.
On a stand alone basis, AboitizPower ended the year on a high note with their earnings well above their previous year’s performance, but we will continue to reduce its share in our total portfolio, as we don’t want to be dependent on just one industry that is regulated. We are on track to our 2030 target of achieving a balanced 50:50 portfolio between thermal and renewable energy. We have solar and battery projects underway, and are exploring nuclear and wind as alternative energy sources. In line with the GT, technology and an innovative culture continues to ramp up in AP’s organization and operations.
UnionBank continues to dominate its industry in terms of technology, rapidly accelerating towards our goal of becoming a bank of enduring greatness, particularly after closing the “Deal of the Decade,” where we acquired the Philippine consumer banking business of the CitiGroup. UnionDigital, our country’s first-ever digital bank, was built from scratch in an astonishing six months record time. We continue to lead in fintech with UBX, created the first Metaversal bank branch, and were the first to offer mobile cryptocurrency trading. The inauguration of the first-of-its-kind UB Innovation Campus in September solidified our commitment to teching-up our country by being a hub for research and development, and home to the first-ever Asian Institute of Digital Transformation. We doubled our customer base, doubled our loans, and quadrupled our income from fees, all in the last three years, which is four times the industry growth rate.
The Food Group started off strong but faced some setbacks in the last year because of the African Swine Flu and the war in Ukraine, but our ambition to become an integrated regional player remains. We will continue on this path prudently, being more selective about which regional markets to penetrate, and at the same time developing some new, potentially game-changing solutions. In April, we will launch Project LEAP, the Food Group’s single biggest tech project that will revolutionize how we work.
At Aboitiz InfraCapital we are heavily investing in both digital and hard infrastructure, building economic estates, water systems, and data towers and centers through our strategic partnership with EdgeConneX. Our “Deal of the Decade” here was acquiring the Mactan Cebu International Airport, which we see as a crucial catalyst to creating value from one of the Philippines’ most promising industries, tourism. AIC will play a much more important role in nation-building through our collaborations with the government. The Philippines is digitizing more than it ever imagined, and as AIC team members like to say: we are making it happen.
Aboitiz Land has been an underinvested industry, but our returns were quite good so we will continue to keep an eye on this. Two hundred new GT initiatives were introduced last year with continued investments in innovating marketing and sales.
Our new game-changing tech startup Aboitiz Data Innovation (ADI) was established in Singapore where we can hire the best talent for data science and artificial intelligence (DSAI). This will enable us to become a techglomerate by digitizing our own businesses, but it will also service clients outside Aboitiz, generating additional revenues. DSAI will be essential in all industries and ADI dreams to become the data science backbone of the country. DSAI is also enabling us to start new tech companies through our Voyager and Foundry programs.
Aboitiz Foundation and ESG
With our new techglomerate approach to sustainability through the Aboitiz Foundation (AFI), our Group will have a much larger role to play in society by modernizing and accelerating the way we advance business and communities. AFI will be delivering the big social impact or the “S” in ESG. Being a sustainability leader in the Philippines is not just about scores and ratings, but also about having ESG initiatives that result in real transformative change all the way down to the grassroots. We are repositioning its branding and reputation to the rest of the world as a partner of choice in the Philippines. If you are a global institution with global funding that wants to help in sustainability-related initiatives in the Philippines, and you want to do it at scale, we are the best partner for you.
We will focus on programs that matter to us and the entire country, such as job creation, upskilling for the future, and attracting the talent we need. With all the challenges our country faces, we need to develop the best minds in science, technology, and engineering — people who can think about a problem and design a solution — and this is just one example of how our new macroscopic AFI will drive our global ESG ambitions.
With the pandemic behind us but with undoubtedly more unpredictable challenges ahead, I want to thank all our shareholders who continue to believe and stay on this incredible adventure with us as we confidently move towards the future with a spirit of curiosity and genuine excitement. Daghang Salamat to all our team members for your continued commitment to driving change for a better world by advancing business and communities.
Sabin M. Aboitiz
President & CEO