Aboitiz Power Corporation reported a 20% decline in net income in 2019 as it earned only ₱17.3 billion compared to the ₱21.7 billion in 2018.
This also slightly pulled down the net income of parent firm Aboitiz Equity Ventures, Inc. (AEV), which ended the year with a net income of ₱22 billion, 1% lower than the ₱22.2 billion recorded in 2018.
Power accounted for 57% of the total income contributions from AEV’s Strategic Business Units (SBUs) in 2019, followed by Banking and Financial Services (30%), Food (7%), Land (4%), and Infrastructure (2%).
AboitizPower is the holding company for the Aboitiz Group’s investments in power generation, distribution, and retail electricity services.
AboitizPower said it recognized non-recurring gains of ₱702 million, versus 2018’s losses of ₱2.1 billion due to net foreign exchange gains from the revaluation of dollar-denominated debts and derivatives, and former business unit Aseagas’ value-added tax recoveries and gains on land appraisal.
Without these one-off gains, AboitizPower’s core net income for 2019 was ₱16.6 billion, 30% lower than the ₱23.8 billion recorded in 2018.
This was mostly due to the outages experienced during 2019, higher replacement power costs, lower spot market sales, increased interest expense, and increased depreciation expense.
“While market conditions had an effect on our 2019 financial result, we acknowledge that it was primarily driven by operational issues. Having done all the necessary measures to address these technical realities, we are positive about a much stronger operational performance and attaining our targets this year,” said Emmanuel V. Rubio, AboitizPower president and chief executive officer.
“We are also confident that our incoming capacities from GNPower Dinginin and full-year operations of Therma Visayas and Hedcor Bukidnon will contribute to our 2020 bottom line,” Rubio added.
AboitizPower’s generation and retail supply business recorded earnings before interest, taxes, depreciation, and amortization (EBITDA) of ₱36.2 billion in 2019, 16% lower than the ₱43 billion recorded for 2018.
This was primarily due to the outages experienced by the company’s coal facilities during 2019 and exacerbated by the need to purchase replacement power at higher spot market prices.
Replacement power was also purchased from the spot market as the company had contracted ahead in anticipation of TVI’s incoming capacity. Decreased spot market sales further eroded year-on-year earnings.
Capacity sold for 2019 increased by 1% to 3,184 megawatts (MW) from 3,154 MW in 2018.
AboitizPower’s distribution business recorded EBITDA of ₱8.2 billion, which was flat YoY.
The company saw energy sales increase in 2019 to 5,851 gigawatt-hours (GWh), 6% higher than the 5,540 GWh recorded in 2018. The increase in earnings, however, was mitigated by lost margins from the decommissioning of Davao Light’s Bajada power plant.
Other business units
For AEV, its core net income for 2019 without one-off gains was ₱21.5 billion, 7% lower year-on-year (YoY) from ₱23.1 billion. AEV recorded consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) of ₱60.2 billion for 2019, 1% lower than the ₱60.7 billion recorded during the previous year.
“Despite challenges in our power business last year, our portfolio was largely able to sustain its operational and bottom line performance, as better-performing businesses continued their positive trajectory,” said Sabin M. Aboitiz, AEV president and chief executive officer.
“As we commemorate the 100th year of our majority owner, Aboitiz & Co., we will continue to build a well-diversified and resilient investment portfolio into the next decade by advancing business and communities,” he added.
Other business units of AEV reported higher bottom lines.
Union Bank of the Philippines’ income contribution to AEV for 2019 amounted to ₱7.2 billion, 100% higher than the ₱3.6 billion recorded in the previous year.
On a stand-alone basis, UnionBank and its subsidiaries posted a record net income of ₱14 billion in 2019, 100% higher than the ₱6.9 billion recorded in 2018. This growth was mainly due to revenue growth from the increase in earning assets and improved margins, as well as from healthy trading gains during 2019.
AEV’s non-listed food subsidiaries’ (Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and Pilmico International Pte. Ltd.) income contribution to AEV amounted to ₱1.58 billion for 2019, 2% higher than the ₱1.56 billion recorded in the previous year.
For 2019, 48% of the Food Group’s total earnings were generated offshore, compared to the 15% recorded in the same period in 2018. Gains from the Food SBU’s overseas unit offset local declines.
AEV’s non-listed real estate businesses, comprising Aboitiz Land, Inc. and its subsidiaries, reported a consolidated net income of ₱943 million for 2019, a 46% increase from the ₱645 million recorded in 2018. This was primarily due to fair valuation gains on investment properties recognized in 2019 which were not present in 2018.
For the Infrastructure group, Republic Cement & Building Materials, Inc.’s income contribution to AEV for 2019 amounted to ₱612 million, 187% higher than the ₱213 million recorded in 2018. This was primarily due to a slight increase in private sector demand for cement, the completion of several debottlenecking projects, and improved controls on production costs. (From PR)