Aboitiz Equity Ventures, Inc. (AEV) ended the first half of 2017 with a net income of P10.3 billion, 2% lower than last year’s P10.5 billion. The company recognized non-recurring losses of P495 million (versus last year’s gain of P100 million) coming from foreign exchange (forex) losses from the revaluation of dollar denominated loans.
Without the one-offs, AEV’s core net income increased 3% year-on-year (YoY), from P10.4 billion to P10.8 billion. AEV recorded a 14% increase in consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization), from P22.8 billion to P26.0 billion.
Major contributors to AEV’s bottom line were Power, Banking and Financial Services, and Food.
“Despite challenges, our results continue to reflect the underlying long-term strength of our core operating businesses, in line with our diversification and value creation strategies. Through our core businesses, we contribute to nation-building, helping uplift the lives of millions of Filipinos,” Erramon I. Aboitiz, AEV President and Chief Executive Officer, said.
Aboitiz Power Corporation’s (AboitizPower) income contribution to AEV decreased by 2% YoY, from P7.7 billion to P7.5 billion, with an increase of 6% YoY in core net income for the half, from P9.8 billion to P10.5 billion.
AboitizPower also recognized non-recurring losses of P744 million (versus last year’s gain of P130 million), bringing AboitizPower’s net income for the first half of 2017 to P9.7 billion, 2% lower YoY.
The generation business accounted for 82% of earnings contributions from AboitizPower’s business segments, recording an income share of P8.1 billion for the first half of 2017, almost flat compared to the same period last year, while the distribution business saw its income share increase by 3% to P1.8 billion.
Banking & Financial Services
Union Bank of the Philippines’ (UnionBank) income contribution to AEV increased by 9% YoY, from P1.9 billion to P2.1 billion.
On a stand-alone basis, UnionBank and its subsidiaries recorded a net income of P4.3 billion for the first half of 2017, 8% higher compared to the P4.0 billion earned for the same period last year. Growth of net income was in view of the sustained growth in recurring income, coupled with trading profits. The strong earnings performance translated to a return on equity and return on average assets of 14.7% and 1.7%, respectively.
Likewise, the income contribution of PETNET, AEV’s other financial services company, increased by 138% YoY to P9 million.
AEV’s 100%-owned food subsidiaries’ (Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation and Pilmico International Pte Limited) income contribution for the first half of 2017 decreased by 19% YoY from P885 million to P717 million.
Feeds Philippines and Flour reported a drop in net income contributions largely driven by higher raw material and operating costs.
On the other hand, Feeds Vietnam and Farms showed remarkable improvements in net income. Feeds Vietnam’s income more than doubled from P24 million to P57 million driven by the 6% volume growth, a result of its expansion in new markets: export and commercial, and better margins.
AEV’s land segment, comprised of 100%-owned AboitizLand and other 100% and majority-owned subsidiaries, registered a net income of P202 million, 138% higher than last year’s P85 million.
The increase in net income was mainly attributable to higher sales booked by the industrial business unit, and improved sales and construction progress by the residential business unit.
From the infrastructure group, Republic Cement’s income contribution to AEV decreased by 43% YoY from P869 million to P494 million. Cement demand slowdown was experienced in the first half of 2017, as compared to the same period last year when there was strong demand due to the election season.