Aboitiz Equity Ventures, Inc. (AEV) ended 2017 with a net income of PHP21.6 billion, 4% lower than last year’s PHP22.5 billion. The biggest income contribution came from its power business (69%), while its Banking & Financial Services, Food, Land, and Infrastructure strategic business units (SBUs) contributed 18%, 7%, 3%, and 3%, respectively.
The company recognized non-recurring losses of PHP2.3 billion (versus last year’s figure of PHP347 million), primarily due to asset impairment and debt prepayment costs, which were partially reduced by a one-off recognition of lower interest expense from an acquired loan.
Stripping out one-off charges, AEV’s core net income in 2017 was 5% higher year-on-year (YoY), rising PHP22.8 billion to PHP23.9 billion. AEV also recorded an 18% YoY increase in consolidated earnings before interest, taxes, depreciation, and amortization, which rose from PHP48.1 billion to PHP57 billion.
“While we faced challenges that tested the resilience of our portfolio, these results still showed the underlying strength of our core operating businesses, prompting our optimism on the long-term fundamentals of our businesses.”
-Erramon I. Aboitiz, President and CEO, Aboitiz Group
Aboitiz Power Corporation’s income contribution to AEV increased by 2% YoY, rising from PHP15.4 billion to PHP15.7 billion, while core net income increased 13% YoY to PHP23.3 billion from PHP20.6 billion.
A non-recurring loss of PHP2.9 billion (versus last year’s losses of PHP611 million) primarily due to impairment and refinancing costs relating to Aseagas and GNPower Mariveles Coal Plant Ltd. Co., respectively, was partially offset by a one-off recognition of lower interest expense from an acquired loan, bringing AboitizPower’s net income to PHP20.4 billion, 2% higher YoY.
BANKING & FINANCIAL SERVICES
Union Bank of the Philippines’ income contribution to AEV decreased by 16% YoY, from PHP4.9 billion to PHP4.1 billion as the bank posted a 2017 net income of PHP8.4 billion, 17% lower than PHP10.1 billion the year previous in the absence of one-off trading gains. Excluding this one-off trading gain, core income surged 31% to PHP8.2 billion from PHP6.2 billion.
AEV’s non-listed food subsidiaries Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation and Pilmico International Pte. Ltd. reported a net income of PHP1.70 billion, 2% lower than 2016’s PHP1.73 billion. The drop in Feeds Philippines and Flour was driven by higher cost of raw materials and operating expenses, while Farms’ improvement was attributed to higher-than-expected rise in live hogs’ selling prices.
Meanwhile, Pilmico International’s income surged in 2017 from PHP7 million to PHP98 million due to the aggressive growth of commercial and export product lines and foreign exchange gains.
From the infrastructure group, Republic Cement and Building Materials, Inc.’s income contribution to AEV decreased 57% YoY from PHP1.6 billion in 2016 to PHP671 million in 2017. Cement demand grew modestly in 2017, but this was offset by lower prices as well as increased fuel and power costs.
“For Aboitiz, advancing business and communities continues through both ongoing and new initiatives. This year, we look forward to supporting the government’s “Build, Build, Build” program through our infrastructure initiatives that aim to drive economic progress and improve the quality of life of our fellow Filipinos,” the Group President added.
AEV’s real estate segment AboitizLand reported a net income of PHP744.2 million an increase of 295% from 2016. The significant increase was due to exceptional business performance of its units and recognized fair valuation gains on investment properties.