Power business hikes 2010 Aboitiz Equity earnings by 163%

Posted at 03/04/2011 1:07 AM | Updated as of 03/04/2011 1:20 AM

MANILA, Philippines – Aboitiz Equity Ventures Inc. (AEV), the publicly-listed holding firm of the Cebu-based Aboitiz clan, reported a net income of P21.9 billion last year, up 163% from 2009 on the stellar showing of its power unit and higher contributions from its banking and food concerns.

In a financial report submitted to securities regulators, AEV said the 2010 profit translates to earnings per share of P3.96.

The power group still accounted for the lion’s share of AEV’s business at 85% or P19.1 billion, which is more than four times the P4.3 billion recorded a year earlier.

The banking and food groups ranked second and third with income shares of 12% and 7%, respectively, offsetting the negative contribution from the integrated transport and logistics group.

“Our businesses at AEV turned in strong operating results. We continue to be guided by our investing discipline and strict adherence to our agreed cost of capital,” said Erramon Aboitiz, president and chief executive officer of AEV.

In the fourth quarter of 2010, AEV reported a 107% jump in net earnings from P2.4 billion to P5 billion.

Last year, the company incurred a non-recurring gain of P30 million as against the P961 million recurring income in 2009. This consisted of P786 million in foreign exchange net gains; P4 million share in National Power Corp. charges that were reversed; P304 million share in refinancing cost of one of the power unit’s associates; and P456 million loss booked for the sale of Aboitiz Transport System.

Accounting for these non-recurring items, AEV’s core earnings surged 197% to P21.8 billion.

The power generation business contributed P18.6 billion last year, representing an increase of 424% year-on-year on improved pricing and volume sales. Average selling prices for bilateral contracts and transactions in the spot market recorded significant improvements of 13% and 181 %, respectively.

Total attributable power sales grew 1115 from 4,619 gigawatt-hours (gwh) to 9,762 gwh.

Full year contributions from assets acquired in 2009, coupled with fresh contributions from completed greenfield plants and assets acquired in 2010, augmented AboitizPower’s attributable net generation for the year.

As of end-2010, AboitizPower’s attributable capacity was at 2,051 megawatts (MW), posting an 18% increase.

“We are executing our strategy to sign more bilateral contracts that will result in more predictable and less volatile earnings,” said Aboitiz in reference to offtake from AboitizPower generation assets.

The food business, through Pilmico Foods Corp., contributed P1.5 billion in net income, 25% higher than the previous year.

Despite lower average selling prices, the flour division’s income contribution went up 79% as volume expansion drove bottom line performance.

MANILA, Philippines - Aboitiz Equity Ventures, Inc. doubled earnings in the fourth quarter last year to P5 billion, with the robust growth mainly driven by energy acquisitions.

The latest figure led to a 163% net income surge to P21.9 billion for 2010, the company said in a statement yesterday.

“Consolidated net income for the fourth quarter registered a 107% year-on-year increase, from P2.4 billion to P5 billion,” Aboitiz Equity Ventures said.

The power business, under Aboitiz Power Corp., accounted for 90% of the earnings, followed by banking and food that offset the negative contribution of the firm’s integrated transport and logistics units.

For the entire year, Aboitiz Equity posted a consolidated net income of P21.9 billion, 163% higher from the previous year.

“The company’s power strategic business units (SBU) still accounted for the lion’s share at 85% while the banking and food SBUs contributed 12% and 7%, respectively, again offsetting the negative share of the integrated transport and logistics businesses,” Aboitiz Equity Ventures said.

For the full year, the company recorded a nonrecurring gain of P30 million compared with the previous year’s P961-million non-recurring income.

Excluding nonrecurring items, Aboitiz Equity Ventures’ core earnings almost tripled to P21.8 billion from P7.3 billion in 2009.

“Our businesses at Aboitiz Equity Ventures turned in strong operating results. We continue to be guided by our investing discipline and strict adherence to our agreed cost of capital,” Aboitiz Equity President and Chief Executive Erramon I. Aboitiz said in the same statement.

Aboitiz Power ended the year with an income contribution of P19.1 billion, up from P4.3 billion in the previous year.

“We are executing our strategy to sign more bilateral contracts that will result in more predictable and less volatile earnings,” said Mr. Aboitiz.

The power distribution business’ electricity sales rose by 9% to 3,606 gigawatt-hours last year.

“Leading the pack was the industrial segment recording an 11% year-on-year growth, while residential and commercial accounts registered 6% and 5% year-on-year expansions, respectively,” the company said.

Customer base rose by 4% for the residential segment and 3% for the nonresidential market.

Aboitiz Equity Ventures owns 76% of Aboitiz Power, which has distribution utilities nationwide.

“Full-year contributions from assets acquired in 2009, coupled with fresh contributions from completed greenfield plants and assets acquired in 2010, augmented Aboitiz Power’s attributable net generation for the year. Fresh contributions from the power barges, the 42.4-megawatt Sibulan hydropower plant and two units of the Cebu coal-fired power plant augmented Aboitiz Power’s attributable net generation for the [fourth] quarter,” Aboitiz Power said in a separate statement.

The banking businesses also posted gains.

“The robust performance of both Union Bank of the Philippines and City Savings Bank, coupled with the increased Aboitiz Equity Ventures ownership in the two banks, resulted to a net earnings contribution of P2.6 billion in 2010, up by 45%,” the company said.

“We credit our banking business’ good results to our focused strategy as well as the tenacity of our bankers,” Mr. Aboitiz said.

Food unit Pilmico Foods Corp. grew its earnings contribution by a quarter to P1.5 billion despite lower average selling prices.

“2010 was an excellent year for Pilmico. Higher margins and increased volumes drove earnings growth, which is a testament to the company’s extensive and strong distribution network,” Mr. Aboitiz said.

The integrated transport and logistics business recorded a net loss of P821 million last year, including impairment provisions made by the new owners of Aboitiz Transport Corp. Last year, the company was sold for $81 million to Negros Navigation Co.

Shares in Aboitiz Equity Ventures surged by 2.49% or P1.05 to close at P43.15 each yesterday.