Listed holding company Aboitiz Equity Ventures, Inc. (AEV) reported a lower net income in the first half of 2019, but top executives remained confident that the company is still well-positioned to pursue projects overseas and poised to reap the benefits of the Philippines’ so-called demographic dividend.
AEV said it earned a net income of P9 billion in the first half of 2019, 11% lower than its P10.1-billion net income in the same period in 2018.
Its core net income, without the one-off gains, was P8.9 billion, 16% lower, as contributions from its power, food and real estate business units declined, the company said in a disclosure on July 31, 2019.
The company was earlier reported to be eyeing airport projects in Vietnam and renewable energy projects in other Asian countries.
“While challenges to our bottom line continue to persist, we have seen recovery across our entire portfolio compared to the same period last year and compared to the previous quarter,” Erramon I. Aboitiz, AEV president and CEO, said in a statement.
“We still feel we are well-positioned to reap the benefits of our country’s ‘demographic dividend’ and to take advantage of opportunities to evolve and expand beyond our borders, as we deepen our role in building a better future for communities,” Aboitiz added.
The company reported a 5% decline in consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) to ₱26.5 billion during the period under review.
The net income contribution of Aboitiz Power Corporation, which accounts for the bulk at 67% of total income contributions, declined by 5% to P6.7 billion due largely to higher volume and cost of purchased power during the first half of 2019.
Of AboitizPower’s contribution, generation and retail electricity supply businesses accounted for 82% at P8.1 billion. The distribution businesses provided P1.8 billion. Both were lower than last year’s contributions by 5% and 12%, respectively.
From the food group, contribution declined 17% to P552 million from P662 million. The food group consists of subsidiaries Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and AEV International Pte. Ltd.
A third of the food group’s total earnings, or about 30%, were generated offshore, an increase from 1% in the same period of 2018.
“This comes as Pilmico International announced earlier this year its full acquisition of Singapore-based feed firm Gold Coin Management Holdings Limited,” the company said.
The food group contributed 6% of the total income in the first half of 2019.
Contribution from the real estate business also declined.
The company’s property development arm, Aboitiz Land, Inc. reported a consolidated net income of ₱60 million for the first half of 2019, 79% lower than the ₱283 million in the same period in 2018.
Its revenues amounted to ₱1.4 billion, 28% lower, due to the “deferred revenue recognition of industrial lot sales”.
Meanwhile, the banking and financial services business contributed ₱2.4 billion, 3% higher than the ₱2.3 billion in the first half of 2018.
Union Bank of the Philippines sustained the growth of earning assets despite lower margins and strategic investment in its digital transformation.
UnionBank launched its own own cryptocurrency called PHX, a stablecoin pegged to the Philippine peso, on July 24, 2019.
The bank, together with OneConnect of China’s Ping An Group, is also building the first blockchain-based financing platform for micro, small and medium enterprises (MSMEs) in the country.
Republic Cement & Building Materials, Inc.’s income contribution to AEV amounted to ₱249 million, 473% higher than the ₱44 million in the same period last year.
This was primarily due to improved control on production costs together with higher market prices and increased private sector demand, AEV said.
The income contributions of each business unit are: 67% from power, 24% from banking and financial services, 6% from food, 2% from infrastructure, and 1% from land.
AEV share prices closed at P53 apiece on July 31, lower than the week ago level of P57.8 on July 25. (Ventures Cebu)