AEV profit slips 29% to P4.9 B as power, banking units sink

MANILA, Philippines - Weaker performance of the power business and lower earnings contribution from the banking unit dragged the earnings of conglomerate Aboitiz Equity Ventures Inc. (AEV) in the first quarter.

In a regulatory filing, AEV said its consolidated net income slipped 29 percent to P4.9 billion in the first three months of the year, translating to an earnings per share of P0.88. Adjusting for these one-off items, AEV said its core net income dropped a fifth to P4.4 billion from a year ago.

For the first quarter, AEV booked a non-recurring income of P470.6 million, bulk of which was due to the recognition of a P634-million gain from the sale of some assets. It was partially offset by the foreign exchange loss of P163.4 million from the revaluation of consolidated dollar-denominated loans and placements.

The conglomerate said out of the total earnings contributions from the strategic business units (SBU), power accounted for 73 percent, followed by banking at 16.6 percent, food at 7.7 percent and land development SBU at 2.8 percent.

Specifically, Aboitiz Power Corp. ended the quarter with an income contribution of P3.2 billion, down nine percent from P3.5 billion last year. When adjusted for non-recurring items, the power SBU recorded a three-percent decrease in its earnings share to P3.4 billion from P3.5 billion.

“Despite the drop in AboitizPower’s earnings, we remain confident in the company’s future growth plans. We remain committed to pursue our business plan, which very much supports the country’s growth trajectory,” said AEV president and CEO Erramon I. Aboitiz.

AboitizPower’s net generation rose a 10th to 2,688 gigawatt-hours (gwh) from 2,450 gwh, driven by the 12-percent growth in power sales through bilateral contracts while spot market sales remained flat.

The company’s attributable sales jumped a quarter to 1,780 megawatts (MW) from 1,419 MW due to “an increase in ancillary volumes as well as higher contracted levels by the generation group,” the power generator said.

“Now more than ever, we need to review our commitment to supply power at reasonable and competitive prices. This is our role, which we are committed to fulfill today and in the future,” Aboitiz said.

For its part, Union Bank of the Philippines’ income contribution sank 59 percent to P730.6 million from P1.8 billion.

While net interest income spiked 25 percent to P2.6 billion due to the robust expansion in earning assets, other income slumped 66 percent to P1.8 billion “largely in view of the exceptionally higher trading gains posted during the first quarter of 2013, which accounted for 55 percent of the total gains,” UnionBank said.

Non-listed subsidiary Pilmico Foods Corp. recorded a four-percent improvement in first quarter income contribution to P338.6 million from P325.2 million.

“The movement was primarily due to the strong performance of the flour division, which registered a net income of P185.6 million year-on-year as a result of the improvement in margins,” Pilmico said.

Property unit AboitizLand Inc. said its income contribution nearly tripled to P121.1 million from P43.1 million. Mainly due to the full consolidation of the recently  acquired Lima Land Inc.

The listed holding firm earlier announced its plan to spend P88 billion this year, up almost 50 percent from P59 billion in 2013. The bulk of expenditures, amounting to P78 billion, will be implemented by the power business as it continues to explore and build new power plants amid the tightening supply-demand situation.