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Aboitiz Group Outlook 2015

The slowdown in economic growth last year is generally attributed to government under-spending. Actual GDP (gross domestic product) for 2014 was at 6.1%, which is lower than the government’s target of 6.5 to 7.5%.

Despite falling short of target, the Philippines continued to gain positive reviews from international economic watchers. The country jumped seven notches in the 2014 World Economic Forum Global Competitiveness Report ratings, now ranked 52nd out of 144 economies. Moody’s Investors Service and Standard & Poor’s upgraded anew their credit ratings for the country with a ‘Baa2’ with stable outlook, and a BBB Stable, respectively. These ratings are an acknowledgement of the country’s governance reforms that have resulted to a more resilient economy.

For 2015, both government and economic analysts are confident of achieving 7-8% domestic growth, primarily driven by increased government spending, stronger private consumption, growth in the BPO industry, and stable OFW remittances. As global oil prices dive sharply, lower inflation, and robust personal spending, in particular, should sustain and further accelerate growth leading up to the 2016 national elections.

The Philippine market today certainly offers substantial opportunities for growth for all our core businesses, and we are eager to reap the benefits of exciting growth prospects.

Aboitiz_Group_Organization

AEV

AEV’s power business continues to contribute the lion’s share of the company’s consolidated net income, accounting for more than 70%, with the balance coming from the banking, food, and land development strategic business units (SBUs). We experienced an anticipated decline in our 2014 earnings mainly because of lower contributions from AboitizPower and UnionBank.

The decline in AboitizPower’s income contribution is the outcome of the full-year impact of the implementation of the Geothermal Resource Supply Contract of the Tiwi-MakBan plants, the Magat plant’s limited operations due to low water levels, and the expiration of the Pagbilao plant’s income tax holiday. The decreased income contribution of UnionBank is a result of the non-recurrence of hefty trading gains realized in 2013.

However, the drop in AEV’s earnings does not affect the fundamental value of our businesses. Our strategic growth plans remain intact as we pursue to further strengthen our businesses, keeping pace with the country’s economic growth. Expansion opportunities abound, not only on the domestic front but beyond our borders as well.

STRATEGIC PILLARS

Last year, after an extensive review of our current and future strategy, the Board and the senior management group were able to reaffirm the relevance of our Group’s four strategic pillars. Moving forward, we will continue to execute our initiatives while remaining focused on these strategic pillars: to grow and expand our business, increase stakeholder engagement, build human capital, and carry on execution excellence in everything we do.

Strategic-Pillars

GROWTH AND EXPANSION

Encouraged by the huge demand for infrastructure in local and regional markets, we have added infrastructure and infrastructure- related businesses as the fifth leg of our core businesses. We foresee the private and public sectors pouring large investments into this sector over the next 10 to 15 years and we want to play a role in this trend.

We will remain supportive of the government’s public-private partnership program even after what happened during the Cavite-Laguna Expressway project bidding.

AEV CORPORATE CENTER

As we pursue further growth, we shall likewise strengthen the AEV Corporate Center as the knowledge center, governance agent, and business partner of the SBUs. It will continue to introduce best-in-class knowledge and practices, take the lead in implementing Group initiatives, and provide value-added services. The Corporate Center will also be responsible for defining policies and standards that will bring everyone across the Group on the same level of excellence.

capex-outlook2015We are pleased with and inspired by the outstanding ratings the Group earned during a reputation survey conducted last year among our key stakeholders. Our shareholders, customers, suppliers, communities, and our team members all had a positive perception of the Group’s overall reputation.

Among all the reputation dimensions surveyed, it was notably in CSR that we were rated “most excellent”. We are now working towards achieving CSR 2.0 in our program areas by implementing more sustainable projects that are, at the same time, more aligned to our businesses.

We will carry on with our BetterWorld journey, always mindful about making the right long- term decisions that balance the interests of people, planet, and profit. We will stay focused on our sustainability mindset that we can do well by doing good.

In everything that we do, we will do it the Aboitiz Way, driven by our Passion for Better Ways, and guided by our core values of integrity, teamwork, innovation and responsibility.

​This year, we celebrate the 95th anniversary of our parent company, Aboitiz & Co., and we are inspired by what the Aboitiz Group has achieved over five generations. This milestone gives us even greater motivation and optimism to pursue our objective to make Aboitiz a truly sustainable enterprise that we can entrust to future generations.