ABOITIZ Equity Ventures, Inc. (AEV) reported on Tuesday a 1% dip in net income to P22 billion for 2019, as its top contributing power business recorded a double-digit profit decline after last year’s power outages.

In a disclosure to the stock exchange, the holding firm said power accounted for 57% of the total income contributions from its strategic business units, followed by banking and financial services (30%), food (7%), land (4%), and infrastructure (2%).

“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.

Without one-time gains, the firm’s core net income for 2019 was P21.5 billion, 7% lower year-on-year from P23.1 billion. It registered consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) of P60.2 billion, 1% lower than the figure in the previous year.

“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,” Mr. Aboitiz said.

Aboitiz Power Corp.’s net income contribution to AEV decreased by 20% to P13.3 billion, which was attributed to the outages experienced by the company’s coal-fired facilities and worsened by the need to buy replacement power at higher spot market prices.

EBITDA for the generation and retail electricity supply businesses was down 16% to P36.2 billion. Replacement power was also bought from the spot market as AboitizPower had contracted ahead in anticipation of Therma Visayas, Inc.’s incoming capacity. Decreased spot market sales further eroded earnings, the company said.

AboitizPower posted a net income of P17.3 billion last year, lower by 20% compared with P21.7 billion in 2018.

It recognized non-recurring gains of P702 million, reversing 2018’s losses of P2.1 billion after net foreign exchange gains from the revaluation of dollar-denominated debts and derivatives, and the value-added tax recoveries and gains on the land appraisal of former business unit Aseagas Corp.

Without the one-off gains, AboitizPower’s core net income was P16.6 billion, 30% lower than the P23.8 billion in 2018. The decrease was largely because of the outages experienced last year, 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.

On Tuesday, shares in AEV fell by 3.35% to P40.45 each, while those of AboitizPower dipped by 0.77% to P26.30 apiece. — VVS