The Aboitiz Group has seen its capabilities tested by the ongoing health crisis, with its first quarter performance reflecting the challenges of the unusual business environment.
Despite mounting headwinds, the Group, through its analysts briefing on April 30, reports more than sufficient liquidity to sustain itself during the prolonged lockdown period. Aboitiz Equity Ventures (AEV) has approximately PHP23 billion of cash in short-term bank deposits after dividend payments, PHP30 billion in available short-term loan facilities with relationship banks, and a PHP10 billion long-term loan facility signed with a local lender in early April.
[W]e have focused our teams on conserving cash, doing away with unnecessary expenses and managing the balance sheet overall as we look into the future and prepare ourselves for emergence from the ECQ.
– Manuel Lozano, CFO, AEV
As different parts of the country went into varying degrees of lockdown, economic activity stalled and demand for power dropped significantly, which in turn affected revenue targets, explained Emmanuel Rubio, AboitizPower President & CEO. “In the short-term, we are in cash preservation mode considering the uncertainty. We have identified capex that we have decided to defer,” he explained.
We are running different simulations. For each picture in mind, we’re trying to come up with options with what we will adjust in terms of our spending, cash management to allow us to manage at least the scenarios we’ve already painted
– Liza Montelibano, CFO, AboitizPower
On its part, UnionBank is also reviewing which branches to convert into ARKs, its digital and paperless branch format first launched in 2017.
“We’re reviewing which branches still require conversion,” said Toto Hilado, CFO of UnionBank. “Maybe we don’t need as many branches moving forward. We have an edge on the digital banking side. The plan is to accelerate products that we have [and] push more products on the digital platform,”
In the same way, Food Group CEO Hubert de Roquefeuil said that they have decreased capex amid slowing demand. Restaurants, hotels, and caterers, which account for a significant part of the farm business’ revenue mix, have closed following the declaration of ECQ.
In addition to a capex review, de Roquefeuil adds that the Food Group has actively responded to challenges in production and supply by securing raw materials to cover full operations until July-August; strengthening sales strategy and supply chain management; implementing flexible collections and payments; and pushing through essential capex to protect its bottomline.
Lima Water Corporation’s management team is also prioritizing mandatory and efficiency-related capex, said Cosette Canilao, President & CEO of Aboitiz InfraCapital.
Republic Cement & Building Materials (RCBM), which is also under the Infrastructure Group, observed that although demand for cement was strong in January to February, this plunged steeply in March following the declaration of Luzon-wide ECQ. However, Nabil Francis, President & CEO of RCBM, remains optimistic about market recovery:
“We strongly believe that the fundamentals of the cement market are good in the Philippines. In our view, the future is not cancelled, it is just postponed.”
In addition to reducing items deemed non-essential to business continuity, AboitizLand has implemented a contactless, end-to-end homebuying system to address limitations brought about by the pandemic.
We invested in this digital platform and tools quite early. When this happened, we weren’t caught complete off-guard. We’re not starting from zero. This is one major change that we have adopted and will continue to adapt.
– Dave Rafael, President & CEO, AboitizLand
Full Blast
Even as the Aboitiz Group tightens its purse to ride out the uncertainties posed by the pandemic, it also understands the critical role of the private sector to keep economic engines turning. Whenever possible, critical projects are still pushing ahead in strict compliance with the social distancing and health protocols.
GNPower Dinginin is in the early stages of construction and ongoing commissioning works, according to Emmanuel V. Rubio, president & CEO of AP. The plant’s unit 1, which has an attributable net sellable capacity of 468 MW, will synchronize and earn commissioning revenues by Q4 2020 and commence commercial operations by Q1 2021. Unit 2, which also has a 468 MW attributable net sellable capacity, will synchronize and earn commissioning revenues by Q1 2021 and commence operations by Q2 2021.
Rehabilitation works on the Naga Power Plant Complex has also been completed in January. With an attributable net sellable capacity of 39MW, the plant is expected to start commercial operations by Q3 2020 once it has secured all the necessary clearance from energy regulators.
The Food Group also continues to build its capacity locally and across the region to cater to growing demand, added de Roquefeuil. While a depot in Bangka Island, Indonesia has already been completed in January, a floating fish line in China and a fish feed line in Vietnam are on track and scheduled to finish in April 2020. On the domestic front, expansion works on the Iligan feedmill and Growfin Farm XII are slated to finish on July 2020 and December 2020 respectively.
But nowhere is this commitment to helping the economy reboot perhaps more evident than in the infrastructure sector. With the government re-allocating funds to combat the effects of COVID-19, the private sector could play a larger role in developing key infrastructure facilities.
Increasing infrastructure spending, whether funded by government or private sector, will play a significant role in helping rebuild our economy. Aboitiz InfraCapital stands ready to support the government in reviving the economy through infrastructure.
– Cosette Canilao, President & CEO, Aboitiz InfraCapital
AIC is working closely with the government before commencing the Swiss Challenge for its proposal on NAIA, fully ready to continue discussions once the ECQ has been lifted. Its proposal for the Bohol-Panglao International Airport has already been approved by the NEDA Board in November 2019 while its proposal for the Laguindingan Airport has already secured approval from the NEDA-ICC Cabinet Committee in December 2019.
For its tower projects proposal, AIC is continuing active engagements with mobile network operators for site acquisition and selection.
Although construction activity has stopped at Apo Agua, Canilao added that AIC is working proactively for a viable recovery plan in anticipation of the eventual lifting of quarantine and put new protocols in place in line with health protocols.
