To keep the country’s economic engines turning, Aboitiz Equity Ventures (AEV) has earmarked PHP47 billion in capital expenditures for 2020, down by a third from the originally-set PHP73 billion. This was revealed at the annual stockholders meetings (ASM) of AEV and AboitizPower held on April 27, 2020, which had new CEOs  Sabin M. Aboitiz and Emmanuel V. Rubio, respectively, delivering each company's President's Report.

The bulk of the capex reduction came from the Group's infrastructure, power, and land units, which mostly covered operating maintenance and expansion costs.  

In 2019, AEV posted a net income of PHP22 billion, a mild 1% decrease from PHP22.2 billion in 2018. The Power Group continued to account for the largest share of total income contribution from strategic business units (SBUs) at 57%. It was followed by the Banking and Financial Services Group, which increased its income contribution to 30%. Contributions of the Food Group and Land Groups hit 7% and 4% respectively, while Infrastructure accounted for the remaining 2%.

Despite  mounting headwinds presented by the ongoing health crisis, SMA calls attention to a time in the company’s history where it was tested and came out stronger: its near bankruptcy in 1921. He emphasizes that the organization is focused on understanding the possible ramifications of the virus on the business and that the Group’s power, banking and food businesses have proven themselves relatively resilient against the demand shock that hit other parts of the economy.

Digital infrastructure investments in previous years and regular business continuity planning has allowed us to cope with the adverse impact of COVID-19. While it’s anyone’s guess how the future will unfold, we assure our stakeholders that we are fully equipped and prepared to guarantee the continuity of all business transactions.

– Sabin M. Aboitiz, President & CEO, Aboitiz Group

Aboitiz Group acted quickly to protect its team members and adjust to the changing work environment. One of the first steps it took was setting aside PHP900 million in assistance, inclusive of the early release of end-March salaries, 13th or 14th month pay. "We did more online work, more work from home--preventive measures are going to be the name of the game until a COVID-19 vaccine is developed," SMA added.

About PHP400 million in monetary and in-kind assistance has also been extended to serve affected communities and support medical and government frontliners nationwide. To date, the Aboitiz Group has contributed PHP1.8 billion for its COVID-19 response efforts. This excludes various payments waived, reduced, extended, or restructured to help customers cope with the impact of the pandemic.

Also read: COVID-19 Situation Gives Rise To A New Kind Of #OneAboitiz

As a whole, SMA expressed optimism that the Group can weather potential headwinds brought about by COVID-19.

Most of our businesses are in industries that are vital to keeping the economy running. Filipinos need electricity, food products, and money, for example. And for our other businesses, we have been prudent in capital expenditure spending so this should not be much of a problem.

Power

The generation and distribution facilities of AboitizPower continue to operate 24/7 in recognition of the vital role of power supply in this time of crisis. As part of its ten-year strategy, AboitizPower is targeting to shift overall capacity mix to nearly 50-50 Cleanergy to thermal, with its renewable energy brand accounting for about 65% of new capacity between 2020-2029.

“With our new targets in place and with the strong support of our team members and stakeholders, we are confident that AboitizPower will sustain its growth momentum for many years,” EVR said.

Unit 1 of GNPower Dinginin, an ongoing AboitizPower project, will synchronize by the fourth quarter of 2020 and commence commercial operations by the first quarter of 2021. Unit 2 will synchronize by the first quarter of 2021 and commence commercial operations by the second quarter of 2021.

Banking and Financial Services

UnionBank leverages its successful digital transformation strategy in addressing the challenges posed by the COVID-19 crisis with a large percentage of its branches remaining open. UnionBank’s balance sheet remains strong enough to withstand significant  financial impact, given its strong income results in 2019.

According to UnionBank President and CEO Edwin R. Bautista, the crisis has accelerated the coming of the digital world as the bank saw its digital customers increase tenfold during the ECQ.

UnionBank had announced an upgrade of its existing UnionBank Online application to  enable users to directly transfer funds nationwide to remittance centers such as Cebuana Lhuillier, LBC, PeraHub, and soon, Palawan Express.

Food

Pilmico’s plants in Tarlac and Iligan, as well as the company’s swine and poultry farms, continue to be operational since the start of local ECQs. Despite challenges, Pilmico continues with its operations and helps stakeholders meet their needs.

Operating in an evolving retail landscape, Pilmico continues to address local demand for pork, meat, and eggs with “The Good Meat”, its food solutions brand and fulfillment center. An e-commerce platform has also been launched  in order to widen its reach and serve customers in Metro Manila.

For 2020, the Food group will continue the integration of Pilmico and Gold Coin, optimizing synergies in procurement, cross-selling across countries, and shared services in its corporate services units.

Infrastructure

Aboitiz InfraCapital reiterated its support for the government’s ‘Build Build Build’ program as the private sector remains committed to collaborating with the country’s leaders to mitigate the crisis’ impact on the Philippine economy.

The infrastructure business unit is closely reviewing the impact of COVID-19 on its projects, especially in the airport sector. For its bulk water supply unit, Apo Agua is closely coordinating with its contractors on which specific work streams can be executed amid Davao City’s ECQ, recovery time, and any implications on obligations with Apo Agua’s partners.

Land

AboitizLand continues to prepare for an expected upswing in commercial real estate demand with its continuous planning of integrated townships such as LIMA Estate in Lipa City, Batangas, where it plans to develop commercial buildings and sell commercial lots in its upcoming business district.

AboitizLand’s industrial business unit also expects fresh demand for new distribution centers and warehouse-type logistics facilities, especially as e-commerce booms. Aside from the said opportunity in the logistics space, there is an emerging demand related to manufacturing companies planning to exit China. Expansion plans to create additional inventory are underway for LIMA Technology Center in Batangas, and West Cebu Industrial Park in Cebu, to take advantage of this demand.

Overall, AboitizLand expects the local real estate market to be quite resilient, with the large unmet demand for housing a significant contributing factor. AboitizLand’s early investments in contactless residential sales and marketing continues for the year and are now paying early dividends.

Construction

Aboitiz Construction continues to operate and work on its projects in Balamban, Cebu, and Mindanao, albeit with stricter precautions. The company hopes to immediately resume work on all its first and second quarter projects in ECQ-affected areas.

This is in line with the Aboitiz Group’s goal of keeping the economy stimulated with the immediate implementation of the government’s infrastructure program, especially projects of national significance.