Foreign operations now account for 31% of Aboitiz food group earnings
The food group of the Aboitiz Equity Ventures, Inc. (AEV) has turned more international with 31 percent of food group’s total earnings in the first nine months this year generated offshore almost doubling the 17 percent share in the same period last year.
AEV’s non-listed food subsidiaries’ - Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and AEV International Pte. Ltd. (AEVI) – income contribution to AEV amounted to ₱1 billion for the first nine months of 2019, a 31 percent decrease from the ₱1.5 billion recorded in the corresponding period last year.
This was due to declines from the Feeds and Farms business segments, which fell due to higher manufacturing costs and operating expenses, and decreased margins following increased feeds costs and lower live hog selling prices, respectively.
However, Pilmico International Pte. Ltd., a subsidiary of AEVI, delivered a net income of ₱683 million in the first nine months of 2019, 84 percent higher year on year due to higher full nine-month income contributions from Gold Coin Management Holdings, which was acquired during the second quarter of 2018, and Pilmico Vietnam Feeds’ increase in margins due to better selling prices and lower raw material cost.
As a result, 31 percent of the Food Group’s total earnings in the first nine months this year were generated offshore versus 17 percent recorded in the same period last year.
Tristan Aboitiz, chief operating officer of Pilmico Foods Corp., expressed certainty of a bigger overseas contribution and direction of their food business following their acquisition last year of Gold Coin.
“The acquisition has kind of redefined our food business because if we look at the capacity of Gold Coin it is three times bigger than Pilmico and is present in six or seven countries and caters to different sectors,” said Aboitiz.
He also said that Gold Coin will continue to expand in countries that they are in, including the Philippines.
While the group’s food business is going more international, Aboitiz said the domestic business will also continue to grow with the expansion of their facilities here to boost capacities. They will commission end this month a meat processing plant in Tarlac to scale up production and to produce more value-added products.
As the domestic economy continues to grow, he said that would be an opportunities for their food and feeds business.
He, acknowledged though that the outbreak of the African Swine Fever has caused uncertainty in the industry and would put a question mark for its feeds and farms division’s performance.
“If the situation continues, then it will be a challenging first half of next year but we could also recover in the second half,” he said.
They would also pursue export potential in Singapore and other countries and to produce more halal products. “I just don’t know how the ASF situation will complicate in the short term,” he said noting that the initial “shock and awe” caused by the virus has affected the industry.
The public’s general skepticism on pork and the two provincial bans on shipment of pork and pork products from Luzon have affected the local hog industry.
He, however, said that it is still too early to tell noting that the ASF outbreak was only in September, and October was the first full month of ASF.
Pilmico Foods, among the four largest flour and feed milling operation in the country. It is primarily engaged in the manufacture of wheat flour and wheat by-products and have been ranked among the top three domestic flour producers in terms of sales. Pilmico also produces animal feeds for swine, poultry (layers and gamefowls) and aquaculture.