Corporate News

AEV profit dips 7% in 1st quarter

Posted on May 05, 2017

ABOITIZ EQUITY Ventures, Inc. (AEV) reported a 7% slide in first-quarter net income to P4.7 billion as one-off foreign exchange losses dampened the holding firm’s financial showing during the period.

The 632-MW GNPower Mariveles power plant is a partnership among AC Energy, Aboitiz Power subsidiary Therma Power and Power Partners.
AEV told the stock exchange on Thursday that it recorded nonrecurring losses of P442 million -- against gains of P186 million last year -- after it recognized losses when it revalued dollar-denominated liabilities and mark-to-market losses on derivatives.

Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) increased by 14% to 12.7 billion. Core net income, considering higher income contributions from associates, rose by 5% to P5.1 billion from P4.9 billion.

The firm’s power business accounted for 67% of earnings from strategic business units. Financial services was a distant second with a contribution of 22%, followed by food with 6%, infrastructure with 4% and real estate with 1%.

Aboitiz Power Corp. posted a 13% drop in net income to P4.4 billion during the January to March period, due to one-time foreign exchange losses, coupled with the near-flat electricity sales.

The power unit’s income contribution to AEV decreased by 13% to P3.4 billion from P3.9 billion previously.

Nonrecurring losses of P577 million were incurred from foreign exchange costs after the revaluation of dollar-denominated debts and derivatives. The losses compare with gains of P242 million during the same period in 2016.

Core net income rose by 4% to P5 billion from P4.8 billion, a growth narrowed by higher interest expense and depreciation, AboitizPower said. Beneficial earnings before interest, tax, depreciation and amortization (EBITDA) increased by more than 13% to P10.8 billion from P9.5 billion.

AboitizPower’s power generation business recorded a beneficial EBITDA increase of 14% to P9.2 billion from P8.1 billion because of the strong performance of its hydropower units and new contributions from GNPower Mariveles Coal Plant Ltd. Co.

“Increased interest expense and depreciation from the initial take up of GNPower-Mariveles costs, narrows the growth at the core net income level to 5%,” the company said.

However, the nonrecurring foreign exchange losses pulled down the business group’s net income by 15% to P3.6 billion.

AboitizPower’s attributable net energy sold remained flat year on year to 3,448 gigawatt-hours (GWh) from 3,451 GWh after the outages of Therma South, Inc. along with the lower dispatch from oil-fired units and the lower steam supply affecting the Tiwi plant output as it continues to recover from the effects of typhoon Nina.

“Our distribution units continue to grow, riding on the expanding economy, renewed confidence in our government and the continued influx of investments into our distribution areas,” said Antonio R. Moraza, AboitizPower, president and chief operating officer, in a statement.

The power distribution group’s gross margin on a per kilowatt-hours basis for the period increased to P1.59 from P1.46 in the first quarter of 2017, the company said. It attributed the improvement to the decline in operating costs due to lower dispatch of Davao Light & Power Co., Inc.’s Bajada power plant.

“Further, improving margins were better recoveries on purchased power costs,” it said.

AboitizPower’s attributable sales for the period was at 1,208 GWh, which was flat from a year ago.

Meanwhile, AEV’s banking business contributed P1.1 billion to the firm, a 30% increase from P837 million a year ago.

UnionBank and its subsidiaries recorded a net income of P2.2 billion, up 27% compared with P1.7 billion in the same period last year.

“The increase in net income was largely in view of the sustained growth in recurring income, coupled with trading profits. The strong earnings performance translated to a return on equity and return on average assets of 15.1% and 1.8%, respectively,” AEV said.

AEV’s 100%-owned food subsidiaries’ Pilmico Foods Corp., Pilmico Animal Nutrition Corp. and Pilmico International Pte Ltd. contributed P292 million, down 25% from P389 million a year ago.

Real estate subsidiary Aboitiz Land, Inc. recorded a net income of P72 million, higher by 46% compared last year’s P50 million. The increase was largely attributed to “higher revenue recognition by the industrial business unit, and improved sales and construction progress by the residential business unit.”

Infrastructure unit Republic Cement and Building Materials, Inc. contributed P391 million, down 48% from P202 million.

“Cement demand slowdown was experienced in the first quarter of 2017, as compared to the same period last year when there was strong demand due to the election season,” AEV said.

On Thursday, shares in AEV rose by 0.13% to P76.75 each, while AboitizPower shares slipped 0.12% to P41.95 apiece. -- Victor V. Saulon