MANILA, Philippines - The Aboitiz family is building up its supply chain business as it decided to keep Aboitiz Transport Corp. (ATS) under its wing after a consortium led by Negros Holdings Management Corp. and KGL Investment B.V. of the Netherlands backed out of its planned acquisition of the local inter-island shipping firm.
Aboitiz president and chief executive officer Erramon Aboitiz said ATS is no longer for sale, pointing out that the group is in fact expanding its supply chain services as it intends to further strengthen its freight business.
The group’s cargo business under the brandname “2GO”, covers containerization, roll-on roll-off (Ro-Ro) services, logistics and supply chain solutions. 2GO’s supply-chain services include warehouse management, order entry and releasing, transport planning and routing, delivery to customers nationwide and document management together with a sales team in market and in-store merchandising support team.
With an existing fleet of 11-12 vessels, ATS will continue to work on ways to increase margins by reducing or eliminating additional costs and improving operating efficiencies in every area of the enterprise.
KGLI-NM cited current constraints in the debt markets as the reason for its decision not to push through with its planned purchase. Under the aborted deal, the foreign-backed consortium was supposed to buy the entire shares of the Aboitiz Group in ATS of about 93 percent for P5 billion.
In the first half this year, ATS reported a net income of P496.1 million, more than 29 times the previous level, mainly due to declining fuel prices. Consolidated revenues went up by only three percent to P6.2 billion while earnings before interest, taxes, depreciation, and amortization nearly rose three-fold to P1.2 billion from P411 million as the shipping firm’s fuel cost fell 28 percent.
Freight business, which accounts for bulk of total revenues, dropped 19 percent due to the decline in its international charting business. The company’s domestic freight shipping operations, on the other hand, grew 16 percent on the back of higher average freight rates.
The group’s supply chain and value added business registered a 228 percent annual revenue growth to P789 million.
Revenues generated from its passenger businesses, which include ancillary revenues, amounted to P1.6 billion, up five percent from the year earlier figure after the company transformed its passage business into a low cost, high yield model with vessel utilization at 82 percent, the highest in the last five years.