By Victor V. Saulon Sub-editor
ABOITIZ Equity Ventures, Inc. (AEV) posted a consolidated third-quarter net income of P7.2 billion, higher by 28% from a year ago in part as the diversified holding company recorded one-off foreign exchange gains to reverse losses in the same period last year.
In a disclosure to the stock exchange, AEV placed the forex gains at P60 million, from last year’s non-recurring losses of P720 million, consisting of net unrealized foreign exchange losses on the restatement of consolidated dollar-denominated debts. It also cited money market placements and pre-termination costs on the refinancing of a subsidiary’s debt as among the one-off items.
Excluding the one-time gains, AEV’s core net income during the quarter was higher by 13% at P7.2 billion.
Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) rose by 14% to P17.6 billion from P15.4 billion recorded during the same period last year.
For the nine months to September, net income reached P17.3 billion, up 9% from P15.9 billion previously, as the firm trimmed its non-recurring forex losses to P407 million from P1.2 billion a year ago. These items represented AEV’s net unrealized foreign exchange losses and pretermination costs on debt refinancing.
Core net income for the nine-month period hit P17.7 billion, up 4% from P17.1 billion a year ago. Consolidated EBITDA at P45.5 billion was 10% higher than the P41.4 billion recorded in the same period last year.
Among AEV’s strategic businesses, the power unit accounted for 72% of the total income contributions, followed by financial services with 17%, food with 8%, real estate with 2% and infrastructure with 1%.
Aboitiz Power Corp. Chief Operating Officer Emmanuel V. Rubio said the subsidiary’s “strong” financial showing as of September “was driven by the continuously increasing demand for reliable, affordable, and sustainable power supply.”
AboitizPower’s income contribution to AEV rose by 6% to P12.8 billion from P12.1 billion for the nine-month period.
For the third quarter, the energy company posted a net income of P7.6 billion, 25% higher than the same period in 2017. This brought its nine-month net income to P16.7 billion, up 6% from a year ago.
Among AboitizPower’s business segments, power generation and retail supply contributed P15.3 billion, up 4%, and accounted for 82% of its contribution to the parent firm.
Consolidated EBITDA rose by 11% to P33 billion primarily due to income contribution of Pagbilao Energy Corp. and Hedcor Bukidnon, Inc. Capacity sold during the review period was almost flat at 3,162 megawatts (MW) from 3,158 MW.
The power distribution business accounted for 18% of the income contributions from AboitizPower’s business segments and recorded an income share of P3.3 billion, which was higher by 8% year on year.
Next to AboitizPower, AEV’s banking and financial services business Union Bank of the Philippines was another big contributor, although its share declined by 5% to P3 billion from P3.1 billion a year ago.
On a stand-alone basis, UnionBank and its subsidiaries recorded net income of P6.1 billion, down 5% from P6.4 billion previously as a result of the lower contributions from CitySavings Bank.
AEV’s non-listed food subsidiaries Pilmico Foods Corp., Pilmico International Pte. Ltd., and Gold Coin Management Holdings Ltd. reported a combined net income of P1.5 billion, 26% higher than the P1.2 billion recorded last year.
Its local feeds business recorded a net income of P475 million, down 8%, due to the increased costs of feeds ingredients and the change in the feeds sales mix to low-margin lines.
The flour business segment earned P276 million, 30% higher than in the same period last year because of foreign exchange gains from short-term dollar investments and higher interest income.
Pilmico International reported net income of P252 million, a 415% jump from last year, due to the fresh contribution of Gold Coin Management, which is an expansion in one of its core feed milling businesses. The new contributor mitigated the effects of higher input costs to Pilmico’s international animal feeds and aqua feeds businesses.
AEV’s real estate subsidiary Aboitiz Land, Inc. reported a 19% rise net income to P403 million with the growth in top-line contributions from the industrial, residential and commercial business units. The non-listed unit also maintained operating expenses at levels similar to those in 2017.
For the infrastructure group, Republic Cement and Building Materials, Inc.’s income contribution to AEV amounted to P221 million, a decrease of 12%. The cement firm said the slight improvement in prices due to government infrastructure spending and stable private sector demand was offset by significant increases in fuel and power costs.
Luis A. Limlingan, business development head at Regina Capital Development Corp., said AEV’s performance was below his firm’s estimates.
“Despite improvements in power and food, weaker quarterly earnings from banking and infra unit still weighed on bottom line to miss estimate,” he said.
He said AboitizPower’s performance met expectations as non-recurring losses were pared within the quarter, on top of stable generation and distribution income. But he said, the company’s year-to-date showing might still be weaker from the slide in the first half of the year.
On Wednesday, shares in AEV traded lower by 2.11% to close at P46.40. AboitizPower was also weaker by 2.35% at P33.20 each.