By Krista A.M. Montealegre, National Correspondent
REPUBLIC Cement and Building Materials, Inc. expects profits to recover this year after higher input costs and intense competition put pressure on margins in 2017, as Aboitiz Equity Ventures, Inc. (AEV) pursues the expansion of its business units.
“The jaw of the tiger is going the other way around. That has to turn, which we think it will,” Sabin M. Aboitiz, president and chief executive officer of Aboitiz InfraCapital, Inc., said in a briefing in Makati City on Monday.
“I think it has hit the bottom (last year).”
The income contribution of Republic Cement to AEV fell by more than half to P671 million last year from P1.6 billion a year ago, dragged by lower prices and increased production costs that eroded margins.
Republic Cement set aside $300 million for increasing the capacity of all its integrated plants in Luzon and Mindanao, both milling and clinker production.
“As we invest in new plants, all of that improves our margins,” Mr. Aboitiz said.
Demand continues to grow, buoyed by the higher spending from the government and private sector.
Aboitiz InfraCapital is not participating in the public auction of the operation and maintenance of the Clark International Airport in Pampanga.
“We’re not ready for Clark. We’re focusing on the regional airports and (the Ninoy Aquino International Airport),” Mr. Aboitiz said. AEV is part of the “super consortium” of the country’s biggest conglomerates that filed a P350-billion proposal to rehabilitate the country’s main gateway.
Abotiz InfraCapital is also drafting a master plan for its national strategy on water investments. Apo Agua Infrastructura, Inc.’s Davao City Bulk Water Supply Project is in the final stages of its documentary requirements, with the Department of Agrarian Reform set to conduct site inspection soon.
Pilmico Foods Corp. plans to venture into the retail market through the firm’s egg and meat depot in Tarlac, which opened in the fourth quarter last year.
Two more depots are currently in the pipeline, with the aim of giving customers direct access to quality Pilmico Farms products, Mr. Aboitiz said.
Aboitiz Land, Inc. is continuing its expansion in Luzon and Mindanao. The Outlets at Lipa, a commercial retail development, aims to open in the first half, and plans are underway to develop a mid-market residential project in Mindanao, Aboitiz Land First Vice-President of Operations Rafa F. de Mesa said.
UnionBank aims to sustain its digital innovation initiatives, focusing on the transformation of existing branches. This year, the bank is studying the possibility of building 10 “lite” versions of The Ark, the lender’s fully digital concept branch.
“Our outlook remains positive as we remain committed to growing and expanding our businesses while keeping within our financial and risk parameters that are approved by the board and disclosed to shareholders,” AEV President and Chief Executive Officer Erramon I. Aboitiz said.
This year, AEV and its subsidiaries are budgeting P77.6 billion in capital expenditures, taking advantage of the vibrant growth opportunities at home and abroad.
Shares in AEV were unchanged at P62.45 each on Monday.
