Aboitiz Group posts modest profit in H1 on non-recurring losses

Aboitiz Equity Ventures, Inc., the investment arm of the Aboitiz Group, managed to grow profits by 2 percent to R10.3 billion in the first half of 2017 from the R10.5 billion earned in the same period last year despite the weight of non-recurring losses.

In a disclosure to the Philippine Stock Exchange, AEV said it recognized nonrecurring losses of R495 million (versus last year’s gain of R100 million) coming from forex losses from the revaluation of dollar denominated loans.

Without the one-offs, AEV’s core net income increased 3 percent year-onyear from R10.4 billion to R10.8 billion. AEV recorded a 14 percent increase in consolidated EBITDA, from R22.8 billion to R26.0 billion.

Subsidiary Aboitiz Power Corporation’s (AboitizPower) income contribution to AEV decreased by 2 percent YoY, from R7.7 billion to R7.5 billion as one-off losses brought AboitizPower’s net income for the first half of 2017 to R9.7 billion, 2 percent lower YoY.

Union Bank of the Philippines’ income contribution to AEV increased by 9 percent YoY, from R1.9 billion to R2.1 billion as it recorded a net income of R4.3 billion for the first half of 2017, 8 percent higher compared to the R4.0 billion earned for the same period last year.

AEV’s 100%-owned food subsidiaries’ (Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation and Pilmico International Pte. Limited) income contribution for the first half of 2017 decreased by 19 percent from R885 million to R717 million.

Feeds Philippines and Flour reported a drop in net income contributions largely driven by higher raw material (RM) and operating costs. On the other hand, Feeds Vietnam and Farms showed remarkable improvements in net income.

AEV’s real estate segment comprised of wholly-owned AboitizLand and other 100 percent and majority-owned subsidiaries, registered a net income of R202 million, 138 percent higher than last year’s R85 million.

The increase in net income was mainly attributable to higher sales booked by the industrial business unit, and improved sales and construction progress by the residential business unit.

From the infrastructure group, Republic Cement and Building Materials, Inc.’s income contribution to AEV decreased by 43 percent YoY from R869 million to R494 million.

Cement demand slowdown was experienced in the first half of 2017, as compared to the same period last year when there was strong demand due to the election season.

Aboitiz Power Corporation (AboitizPower) suffered from a non-recurring losses in the first six months of the year, resulting to a lower income of R9.7 billion year-on-year.

In a separate filing with the PSE, AboitizPower attributed the 2 percent decrease in its to a non-recurring losses of R744 million (versus last year’s gain of R130 million) from foreign exchange losses on the revaluation of dollardenominated liabilities.

At the same time, the listed firm said it saw an 18 percent year-on-year increase in consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) from R18.4 billion to R21.8 billion.

But increased interest expense and depreciation narrowed the growth at the core net income level to 6 percent yearon-year from R9.8 billion to R10.5 billion.

The power generation business group of the company accounted for the 84 percent of its EBITDA, recording a consolidated share of R18.0 billion for the first half of 2017, up 22 percent year on year.

At the core net income level, the generation business grew 8 percent from R8.2 billion to R8.9 billion.

After taking into account one-off items, AboitizPower’s generation business income contribution amounted to R8.1 billion, almost flat compared to the same period last year.

For the period, AboitizPower’s capacity sold increased by 33 percent, from 2,033 megawatts (MW) to 2,706 MW, mainly driven by the additional capacity of GNPower Mariveles Coal Plant Ltd. Co. and higher capacity sold from hydro units due to better hydrology in 2017.

"Our core power generation and power distribution businesses have continued to post significant growth. Our new power plants are contributing significantly while our existing power plants are continuously improving in terms of availability and reliability," said Antonio R. Moraza, AboitizPower President and Chief Operating Officer.

"We will continue, likewise, to take advantage of the economic growth in our franchise areas by providing reliable and cost-effective power coupled with the best possible service,” he added.

Company's EBITDA for the distribution business increased by 3 percent from R3.3 billion to R3.4 billion, while its net income contribution increased by 3 percent for the first half of 2017 to R1.8 billion.

The group’s gross margin on a per-kilowatt-hour basis for the period increased to R1.63 from R1.50 in the first half of the year. The improved margins came from better supply mix and recoveries on purchased power costs.

AboitizPower’s attributable sales in the distribution group for the period was at 2,546 gigawatt-hours, registering a 1.4% increase from the same period last year.