Aboitiz Equity Ventures, Inc. (AEV) saw its consolidated net income increase by 27% year-on-year (YoY) from P17.7 billion in 2015 to P22.5 billion in 2016. This translates to P4.02 in earnings per share. Power accounted for 65%, followed by the Banking and Financial Services, Food, Infrastructure, and Land strategic business units (SBUs) with income contributions of 21%, 7%, 7% and 1%, respectively.
For the period ending December 31, 2016, the company incurred a non-recurring loss of P347 million (versus the previous year’s loss of P602 million), which mainly resulted from the mark-to-market revaluation of the Power BUs’ consolidated dollar-denominated assets and liabilities refinancing costs and goodwill impairment, partly offset by the net forex (foreign exchange) gains from revaluation of dollar-denominated assets and liabilities. Adjusting for these one-off’s, AEV’s core net income amounted to P22.8 billion, which was 25% higher than last year.
“Through our value creation efforts, we are poised to take advantage of the tailwind our growing economy brings. The gains we recorded over 2016 affirm the soundness of our business strategy of creating a diversified income stream,” said Erramon I. Aboitiz, AEV President and Chief Executive Officer.
“This year, the Group will take even more deliberate steps in bringing progress to communities in line with our strategic objectives,” Aboitiz added.
Strategic Business Units
Aboitiz Power Corporation’s (AboitizPower) income contribution to AEV increased by 14% YoY, from P13.5 billion to P15.4 billion. On a stand-alone basis, AboitizPower’s income performance recorded a 14% YoY increase, from P17.6 billion to P20.0 billion.
The generation business accounted for 82% of earnings contributions from Aboitiz Power’s business segments, recording an income share of P16.3 billion for 2016, up 17% YoY. The growth was largely driven by Therma South’s new contribution.
The power distribution group’s earnings share for 2016 decreased by 4%, from P3.8 billion to P3.7 billion. This is equivalent to 18% of earnings contributions from AboitizPower’s earnings.
Banking & Financial Services
Union Bank of the Philippines’ (UnionBank) income contribution to AEV increased by 92% YoY, from P2.5 billion to P4.9 billion.
On a stand-alone basis, UnionBank and its subsidiaries recorded a net income of P10.1 billion for 2016, almost double the P5.3 billion posted in 2015. The surge in net income was largely attributable to the profits from securities sold in the second half of the year to support the Bank’s loan growth strategy which accounted for P3.8 billion. The remaining increase is attributable for the growth of recurring revenues (net interest income and fees), which accounted for 76% of total operating income.
AEV’s food subsidiaries Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and Pilmico International Pte Limited’s total earnings and income contribution slightly increased, posting a 1% growth YoY in net income for 2016 at P1.7billion.
Feeds Philippines’ income contribution to Pilmico increased by 13% to P963 million on the back of strong volume growth. Despite lower margins brought about by depressed selling prices, the Flour segment’s income contribution was slightly higher by 1% YoY to P557 million on better performance of Flour’s by-products.
On the other hand, Feeds Vietnam and Farms reported a decrease in income contributions mainly driven by lower prevailing selling prices. Feeds Vietnam dropped to P90 million with the decline in selling prices and volume.
AEV’s investment in infrastructure, Republic Cement and Building Materials, Inc.’s (RCBM) income contribution to AEV increased by 700% YoY from P194 million to P1.6 billion. RCBM only started contributing last mid-September of 2015. As compared to proforma 2015 full year accounts, operating profit of RCBM was ahead due to higher selling prices and lower variable costs.
AEV’s land subsidiary, Aboitiz Land Inc.’s (AboitizLand) total earnings and income contribution to AEV decreased by 65% YoY, from P536 million to P188 million. AboitizLand posted a revenue of P2.4 billion in 2016, 7% lower YoY. The drop in NIAT (net income after tax) was mainly due to deferred industrial business unit revenue recognition, planned increases in operating expenses intended for the organization’s future growth.