AEV nets P10.2 billion in first semester of 2011

CEBU, Philippines - Cebu-based conglomerate Aboitiz Equity Ventures, Inc. (AEV) posted P10.2 billion net income revenue for the first semester of 2011, a nine percent decline compared to the same period of last year.

For the semester ending June 30, 2011, AEV’s consolidated assets amounted to P186.7 bn, up by seven percent from the yearend 2010 level.

Cash and cash equivalents was at P28.9 billion, 11 percent higher than the yearend 2010 level of P26.1 billion.

Consolidated liabilities amounted to P106.2 bn, while equity attributable to equity holders of the parent increased by three percent to P66.1 bn.

In a recent disclosure to the Philippine Stock Exchange (PSE), EAV reported that its Power continued to account for the lion’s share at close to 80 percent, which was followed by the banking and food SBUs with income contributions of 14 percent and 6 percent, respectively.

During the first half, AEV incurred a non-recurring gain of P109 million (mn) (versus last year’s non-recurring loss of P120 mn), which was a result of the revaluation of consolidated dollar-denominated liabilities. An additional P403 mn in one-off gains were logged by AEV due to: (1) a power subsidiary effected a revenue adjustment in the first quarter of 2011 brought on by a favorable ruling by the industry regulator involving its ancillary services tariff structure; and (2) an associate company recovered costs relating to its fuel importation in the second quarter of 2011.

For the second quarter alone, AEV recorded a consolidated net income of P5.6 billion (bn), an 11% YoY expansion. Out of the total earnings contributions from the company’s strategic business units (SBUs), power accounted for 75 percent. Income share of the banking and food SBUs were at 18 percent and seven percent, respectively.

For the April to June period, the revaluation of consolidated dollar-denominated loans and placements resulted to a non-recurring gain of P28 million, versus last year’s P428 mn. In addition, an associate company of its power SBU booked a one-off gain, as it received cost reimbursements from the National Power Corporation (NPC) relating to its fuel importation. AEV’s share in this non-recurring gain amounted to P137 mn. Adjusting for these one-offs, AEV closed the quarter with core profits of P5.4 billion, replicating last year’s level.

“The Navotas power barges reiterate AboitizPower’s belief in the benefits of having a balanced mix of various technologies using different fuels to diversify risk, each serving a different role for the grid,“ said AEV President & CEO Erramon Aboitiz.

“AboitizPower remains on growth mode in terms of our generation capacity. Aquisitions drove our expansion the past few years; new greenfield projects are the next wave of capacity additions. We’ve had recent positive developments at the Davao and Subic coal-fired power projects we are developing. The rebirth of the Ambuklao Hydro is another exciting addition to our portfolio,“ he added.

Improved volumes and margin expansions resulted to a 74 percent YoY increase in the power distribution group’s income contribution for the first semester of 2011, from P449 mn to P781 million. AboitizPower’s attributable electricity sales for the period ending June 30, 2011 grew by three percent year-on-year, from 1,753 GWh to 1,814 GWh. Growth was mainly a result of the strong showing of the industrial customer segment with a seven percent YoY increase in attributable power consumption.

The group’s gross margin for the semester improved by 39 percent YoY to P1.32/kWh due to the shift to Performance Based Regulation scheme by Davao Light & Power Company (Davao Light) and Visayan Electric Company (VECO) in August 2010.   

Moreover, Davao Light recorded a reduction in operating expenses as operation of its back-up power plant was not required given the improved power supply situation in Mindanao during the period in review.

The banking SBUs’ income contribution on the other hand, for the first semester of 2011 increased by 49 percent YoY ,from P964 mn to P1.4 bn.

For the first half of 2011, the income contribution from AEV’s food SBU, Pilmico Foods Corporation (Pilmico), recorded a 25 percent YoY decline, from P867 mn to P650 mn. All business segments recorded volume increases for the period in review. Except for the swine unit, average selling prices also registered YoY improvements.

However, increases in input costs weighed down the profitability across the businesses. The bottomline contribution of the flour, feeds and swine segments for the first semester of 2011 decreased by 37 percent, 7 percent and 38 percent, respectively.

AEV is the publicly listed holding and investment company of the Aboitiz Group with major investments in power, banking and food. Two of its investee companies are also listed on the Philippine Stock Exchange. AEV is consistently recognized in international surveys as among the Philippines’ best managed companies and has also been cited for its commitment to good corporate governance. (FREEMAN)