ABOITIZ Equity Ventures, Inc. (AEV) reported a 3% rise in its second-quarter consolidated net income to P5.4 billion, in part after the holding firm and its biggest contributing unit both recognized non-recurring gains.
It told the stock exchange on Wednesday that the one-off gains of P412 million during the period were mainly from unrealized foreign exchange gains on the revaluation of dollar-denominated net liabilities as against a forex loss of P42 million a year ago.
Without these gains, AEV said its core net income during the quarter was at P5 billion, down 6% compared with the previous year’s.
“While challenges to our bottomline continue to persist, we have seen recovery across our entire portfolio compared to the same period last year and compared to the previous quarter,” said Erramon I. Aboitiz, AEV president and chief executive officer, in a statement.
Its energy subsidiary Aboitiz Power Corp. (AboitizPower)contributed the bulk of earnings during the period. It reported a second-quarter net income of P5 billion, down 2% from a year ago.
The unit recognized non-recurring gains of P560 million, reversing last year’s one-off losses of P196 million.
Without these gains, AboitizPower’s core net income was at P4.5 billion, declining 16% from the previous year largely because of the interest expense incurred after the company’s bond issuance in October 2018, take-up of interest and depreciation expenses from Hedcor Bukidnon, Inc. and Therma Visayas, Inc.
In the first half, AEV’s net income was lower by 11% at P9 billion. Core net income was down 16% to P8.9 billion.
“We still feel we are well-positioned to reap the benefits of our country’s ‘demographic dividend’ and to take advantage of opportunities to evolve and expand beyond our borders, as we deepen our role in building a better future for communities,” Mr. Aboitiz said.
Power accounted for 67% of the semester’s total income contributions from AEV’s strategic business units, followed by banking and financial services (24%), food (6%), infrastructure (2%), and land (1%).
AboitizPower’s net income in the first six months slipped by 5% to P8.6 billion, while core net income fell by 19% to P8.5 billion largely as a result of the higher volume and cost of purchased power during the period.
“The first half of 2019 was challenging for AboitizPower as Luzon faced supply issues leading to the elections. Nevertheless, we remained committed to serving our customers to the extent of providing them with replacement power that we bought from the spot market at rates higher than our contract prices,” said Emmanuel V. Rubio, AboitizPower chief operating officer.
The company said spot market prices were “exceptionally high” during the period, which also saw it buying replacement power because of the outages and advanced contracting ahead of incoming capacity.
AboitizPower’s net income contribution to AEV decreased by 5% to P6.7 billion due largely to higher volume and cost of purchased power during the first half.
Income contributions from the generation and retail electricity supply businesses accounted for 82% of total income contributions from AboitizPower’s business segments, which reached P8.1 billion, down 5%. The distribution business posted an income share of P1.8 billion, lower by 12%.
Union Bank of the Philippines’ income contribution to AEV rose by 3% to P2.4 billion as it sustained the growth of earning assets despite lower margins and strategic investment in its digital transformation.
The contribution of non-listed food subsidiaries Pilmico Foods Corp., Pilmico Animal Nutrition Corp., and AEV International Pte. Ltd. amounted to P552 million, or lower by 17%. The food group’s total earnings were generated offshore as against the 1% a year ago, as Pilmico International announced earlier this year its full acquisition of Singapore-based feed company Gold Coin Management Holdings Ltd.
Republic Cement & Building Materials, Inc.’s income contribution to AEV jumped 473% to P249 million, primarily due to improved control on production costs coupled with higher market prices and increased private sector demand.
Aboitiz Land, Inc. reported a 79% drop in consolidated net income to P60 million, while its revenues slipped by 28% to P1.4 billion. The company attributed the decline to the deferred revenue recognition of industrial lot sales.
On Wednesday, shares in AEV slipped 1.76% at P53 each, while those of AboitizPower fell by 2.21% to P35.40 each. — Victor V. Saulon