AEV Q3 profit dips as power unit falls

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By Victor V. Saulon, Sub-Editor

ABOITIZ Equity Ventures Inc. (AEV) posted a 6% drop in third-quarter net income to P6.8 billion as its power business segment, the biggest contributor to its bottom line, recorded a double-digit profit fall during the period.

“Despite challenges in our power business, better operating performance in our non-power businesses provided resilience to our investment portfolio. As we fund our growth projects, we look to further broaden and strengthen our diversification in the Philippines and overseas,” said Erramon I. Aboitiz, AEV president and chief executive officer.

During the July to September period, the holding firm also recognized a non-recurring loss of P234 million in unrealized foreign exchange losses, reversing the P60-million gains in the same period a year ago.

Without the one-time losses, AEV said its core net income was down by 2% to P7 billion. Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter rose by 4% to P18.3 billion.

Aboitiz Power Corp. recorded a 36% decline in its third-quarter income to P4.8 billion after recognizing non-recurring losses of P340 million, bigger than the P326 million one-off losses a year ago.

AboitizPower’s core net income fell by 35% to P5.1 billion because of lower EBITDA, interest expense from the bonds issued in October 2018, and take-up of interest and depreciation expenses from Hedcor Bukidnon, Inc. and Therma Visayas, Inc.

“It has been a tough year for AboitizPower with the supply issues that resulted in the high cost of replacement power for our customers. The company has also generated lower revenues from the spot market due to challenges that caused some of our power plants to shut down,” said Emmanuel V. Rubio, AboitizPower chief operating officer.

“Despite this, our customer base continues to grow, which underscores the consumers’ trust and confidence in AboitizPower. Moreover, we remain confident that with our incoming capacities, we will surpass our 2020 target of 4,000 megawatts attributable capacity, ensuring sustainable growth for the company, our shareholders, and the customers and communities we serve,” he added.

For the nine months to September, AEV recorded a 9% drop in its net income to P15.7 billion after recognizing non-recurring losses of P155 million, representing net foreign exchange and derivative losses.

Although lower than the previous year’s P407 million, the one-off losses weighed down its core net income by 10% to P15.9 billion. AEV’s EBITDA was also lower by 2% to P44.8 billion.

Power made up 60% of the total income contributions from AEV’s strategic business unit. Financial services, food, real estate, and infrastructure units contributed 25%, 6%, 5% and 4%, respectively, to the total income.

As of end-September, AboitizPower’s income contribution was down by 19% to P10.4 billion, while on a stand-alone basis, its core net income dropped by 26% to P13.7 billion. Including non-recurring losses of P220 million, net income was P13.5 billion, 19% lower compared with the level a year ago.

The generation and retail electricity supply made up 80% of the contributions from the business segments, although the figure was down 18% to P12.6 billion.

Consolidated EBITDA fell by 13% to P28.7 billion, driven by the higher volume and cost of purchased power, lower spot market revenues, and lower plant availability.

Power capacity sold during the period went down by 1.5% to 3,123 megawatts (MW) from 3,169 MW a year ago because of lower energy availability. The power distribution business accounted for 20% or P3.1 billion, although lower by 6% compared with a year ago.

Meanwhile, Union Bank of the Philippines’ income contribution to AEV rose by 41% to P4.2 billion. On a stand-alone basis, the bank and its subsidiaries recorded a net income of P8.5 billion, 40% higher from a year ago, due to the strong revenues from the sustained double-digit growth in earning assets and strong trading gains.

AEV’s non-listed food subsidiaries contributed P1 billion to AEV, down by 31% from the previous year. These units are Pilmico Foods Corp., Pilmico Animal Nutrition Corp., and AEV International Pte. Ltd.

AboitizLand, Inc., which is also not listed, along with its subsidiaries recorded a net income of P829 million or more than double the previous year due to the fair valuation gains on investment properties, which were not present a year ago.

For the infrastructure group, Republic Cement & Building Materials, Inc.’s income contribution to AEV amounted to P631 million, nearly three times the previous year, because of the improved controls on production costs, increased private sector demand, and the completion of several debottlenecking projects.

On Wednesday, shares in AEV fell by 3.89% to P54.40 each, while those of AboitizPower slipped by 3.09% to P39.15 apiece.