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RSSAEV 1Q income up 27% to 5.9 bn
Friday, May 4, 2012
Aboitiz Equity Ventures, Inc. (AEV) ended the first quarter of 2012 with a consolidated net income of P5.9 billion (bn), recording a 27% increase year-on-year (YoY). This translates to an earnings per share of P1.06 for the period in review.
For the first quarter, AEV booked one-off gains of P386 million (mn) due to the revaluation of consolidated dollar-denominated loans and placements. In addition, AEV’s power subsidiary unit booked gains of P11 mn that resulted from its associates’ share redemption during the quarter. Adjusting for these one-offs, AEV’s core net income amounted to P5.5 bn, up by 28% from the same period last year.
Out of the total earnings contributions from the company’s strategic business units (SBU), power accounted for 73%. Banking and food contributed 23% and 4%, respectively.
Strategic Business Units
Power
Aboitiz Power Corporation (AboitizPower) ended the quarter with a higher income contribution of P4.3 bn, vis-à-vis the previous year’s P3.9 bn. When adjusted for non-recurring items, AboitizPower recorded a 10% YoY improvement in its earnings share, from P3.6 bn to P3.9 bn.
The power generation business contributed P3.9 bn for the quarter, up by 4% YoY. Increased average selling prices and higher net generation accounted for the enhanced bottomline performance of the group.
AboitizPower’s average selling price for its power recorded a 5% YoY improvement. This was mainly attributable to the higher prices at the Wholesale Electricity Spot Market (WESM). Curtailed supply due to higher average plant outages and a surge in demand during the quarter led to the 34% YoY hike in the average price of electricity in the Luzon grid’s spot market.
Attributable net generation for the quarter rose by 13% YoY, from 2,168 gigawatt hours (GWh) to 2,452 GWh. This was driven by a 22% expansion in power sales through bilateral contracts. In terms of capacity, AboitizPower sold, on an attributable basis, 1,483 megawatts (MW), up by 14% YoY. This was on the back of rising capacity sales through bilateral contracts and improved levels of ancillary services.
As of quarter end, AboitizPower’s attributable capacity was at 2,350 MW, posting a 15% YoY increase. The growth was due to the following: assumption of full ownership of and control over the 70-MW Bakun hydro run-of-river plant in May 2011, acquisition of the 242-MW Navotas power barges in May 2011, the full completion of the rehabilitation of the Ambuklao hydropower facility in September 2011, the completion of the 4-MW Irisan hydropower Greenfield project in September 2011, and the partial completion of the rehabilitation works at the Binga hydropower facility.
“Our strategy for sustaining our growth trajectory is to build additional capacity through greenfield projects to supply future growth of the economy. We will also continue the rehabilitation of our existing facilities to maximize capacity and improve reliability,” said AboitizPower president & CEO Erramon Aboitiz.
The company’s distribution business recorded expansions in volumes and margins resulting to a 62% YoY increase in the sector’s income contribution to AboitzPower for the first quarter, from P347 mn to P563 mn. The company’s attributable electricity sales grew by 7% YoY, from 889 GWh to 950 GWh. Growth was spurred mainly by an 8% YoY increase in attributable power consumption of the industrial customer segment, while the residential and commercial sectors posted healthy growth rates of 6% and 4%, respectively. Gross margin for the group improved on a YoY basis mainly due to the implementation of the rate structures approved under the Performance Based Regulation scheme.
Banking
Income contribution from banking recorded a 215% YoY expansion, from P422 mn to P1.3 bn.
Union Bank of the Philippines (UnionBank) ended the quarter with an earnings contribution of P1.2 bn, a 285% jump YoY. The bank’s net interest income for the first quarter of 2012 was slightly up by 1% YoY to P1.8 bn. Total interest income amounted to P2.9 bn on generally lower average yields of earning assets and drop in average levels of due from other banks.
Gross interest income on loans and receivables, however, increased to P1.7 bn as the expansion in the average levels of these investments more than offset the decline in its average yields. Total interest expense, on the other hand, went down by 16% YoY to P1.1 bn due to the drop in average levels of high- cost deposits and lower borrowings as the bank exercised the call option on the P1.3 bn unsecured subordinated loans in September 2011.
As a result of the foregoing and higher impairment losses booked for the quarter in review, net interest income after impairment losses declined by 4% YoY to P1.6 bn.
Non-interest income for the quarter soared to P3.9 bn from P1.2 bn a year ago, driven primarily by hefty trading gains. Higher premium revenues also contributed to the significant increase in non-interest income due to the higher sales of its subsidiary’s pre-need plans. The corresponding trust fund contributions of said plans, salaries and employee benefits in support of the bank’s expansion initiatives, taxes and licenses drove operating expenses to increase by 31% YoY.
UnionBank's asset base stood at P260.1 bn as of end of March 2011, with a deposit level of P190.3 bn and a loan book of P115.2 bn. The bank's capital adequacy ratio and Tier 1 ratios further strengthened to 19.7% and 16.9%, respectively.
“Anticipating continued market volatility this year, UnionBank will continue to exploit trading opportunities to augment the earnings from our lending business as we did in the first quarter,” Aboitiz said.
AEV’s non-listed thrift bank, City Savings Bank (CitySavings), contributed earnings of P99 mn during the quarter, down by 4% YoY. Net interest income grew by 18% YoY to P320 mn, mainly attributable to the robust growth in the bank’s interest income on loans and services, which expanded by 28%, from P387 mn to P493 mn.
The implementation of CitySavings’ expansion program and various initiatives pushed up operating expenses by 27% YoY, which weighed down the bank’s overall profitability. The bank ended the quarter with a loan book of P10.9 bn and total resources of P15.8 bn, up by 10% and 21% from year-end 2011 levels, respectively. NPL ratio for the quarter ending March 31, 2012 was roughly at 1% while the NPL coverage ratio was at 129%. Total capital funds amounted to P1.9 bn with a capital adequacy ratio of close to approximately 15%.
Food
AEV food subsidiary Pilmico Foods Corporation, recorded a 22% YoY decline in its first quarter income contribution, from P282 mn to P219 mn. The flour business logged a 12% YoY increase in its income contribution given the 4% YoY expansion in both volume sales and gross margin. Higher input costs resulted to a 9% YoY drop in the feed unit’s bottomline. Poor market condition, i.e. lower average selling price and higher input costs, coupled with lower volume sales saw the swine unit ending the quarter with a negative income contribution.
Financial Condition
For the quarter ending March 31, 2012, the AEV’s total consolidated assets amounted to 207.9 bn, 3% higher than the 2011 yearend level. Cash and cash equivalents amounted to P34.8 bn, 18% higher than yearend 2011 level of P29.5 bn. Consolidated liabilities totaled to P107.2 bn, while Equity Attributable to Equity Holders of the Parent increased by 6% to P81.7 bn. Current ratio as of March 31, 2012 was at 3.5x (versus year-end 2011’s 3.0x), while net debt-to-equity ratio was at 0.5x (versus year-end 2011’s 0.6x).
Corporate Social Responsibility
Alongside the growth of AEV’s businesses is its stronger commitment to corporate social responsibility (CSR).
“CSR is an integral part of our business model. Our philosophy is such that the success of our business should benefit all our stakeholders, including our communities. We feel it is imperative that we match our business expansion with investments in our communities and in health, education and other facilities,” said Aboitiz.
The Aboitiz Foundation almost tripled its budget for CSR groupwide projects from P95 mn in 2010 to P280 mn in 2012. “As the Aboitiz Group grows, its CSR initiatives should also reach wider across the country, serving more communities and enriching more lives,” he added.
AEV is the publicly listed holding and investment company of the Aboitiz Group with major investments in power, banking and food. Two of its investee companies are also listed on the Philippine Stock Exchange. AEV is consistently recognized in international surveys as among the Philippines’ best managed companies and has also been cited for its commitment to good corporate governance. (www.aboitiz.com)
For the first quarter, AEV booked one-off gains of P386 million (mn) due to the revaluation of consolidated dollar-denominated loans and placements. In addition, AEV’s power subsidiary unit booked gains of P11 mn that resulted from its associates’ share redemption during the quarter. Adjusting for these one-offs, AEV’s core net income amounted to P5.5 bn, up by 28% from the same period last year.
Out of the total earnings contributions from the company’s strategic business units (SBU), power accounted for 73%. Banking and food contributed 23% and 4%, respectively.
Strategic Business Units
Power
Aboitiz Power Corporation (AboitizPower) ended the quarter with a higher income contribution of P4.3 bn, vis-à-vis the previous year’s P3.9 bn. When adjusted for non-recurring items, AboitizPower recorded a 10% YoY improvement in its earnings share, from P3.6 bn to P3.9 bn.
The power generation business contributed P3.9 bn for the quarter, up by 4% YoY. Increased average selling prices and higher net generation accounted for the enhanced bottomline performance of the group.
AboitizPower’s average selling price for its power recorded a 5% YoY improvement. This was mainly attributable to the higher prices at the Wholesale Electricity Spot Market (WESM). Curtailed supply due to higher average plant outages and a surge in demand during the quarter led to the 34% YoY hike in the average price of electricity in the Luzon grid’s spot market.
Attributable net generation for the quarter rose by 13% YoY, from 2,168 gigawatt hours (GWh) to 2,452 GWh. This was driven by a 22% expansion in power sales through bilateral contracts. In terms of capacity, AboitizPower sold, on an attributable basis, 1,483 megawatts (MW), up by 14% YoY. This was on the back of rising capacity sales through bilateral contracts and improved levels of ancillary services.
As of quarter end, AboitizPower’s attributable capacity was at 2,350 MW, posting a 15% YoY increase. The growth was due to the following: assumption of full ownership of and control over the 70-MW Bakun hydro run-of-river plant in May 2011, acquisition of the 242-MW Navotas power barges in May 2011, the full completion of the rehabilitation of the Ambuklao hydropower facility in September 2011, the completion of the 4-MW Irisan hydropower Greenfield project in September 2011, and the partial completion of the rehabilitation works at the Binga hydropower facility.
“Our strategy for sustaining our growth trajectory is to build additional capacity through greenfield projects to supply future growth of the economy. We will also continue the rehabilitation of our existing facilities to maximize capacity and improve reliability,” said AboitizPower president & CEO Erramon Aboitiz.
The company’s distribution business recorded expansions in volumes and margins resulting to a 62% YoY increase in the sector’s income contribution to AboitzPower for the first quarter, from P347 mn to P563 mn. The company’s attributable electricity sales grew by 7% YoY, from 889 GWh to 950 GWh. Growth was spurred mainly by an 8% YoY increase in attributable power consumption of the industrial customer segment, while the residential and commercial sectors posted healthy growth rates of 6% and 4%, respectively. Gross margin for the group improved on a YoY basis mainly due to the implementation of the rate structures approved under the Performance Based Regulation scheme.
Banking
Income contribution from banking recorded a 215% YoY expansion, from P422 mn to P1.3 bn.
Union Bank of the Philippines (UnionBank) ended the quarter with an earnings contribution of P1.2 bn, a 285% jump YoY. The bank’s net interest income for the first quarter of 2012 was slightly up by 1% YoY to P1.8 bn. Total interest income amounted to P2.9 bn on generally lower average yields of earning assets and drop in average levels of due from other banks.
Gross interest income on loans and receivables, however, increased to P1.7 bn as the expansion in the average levels of these investments more than offset the decline in its average yields. Total interest expense, on the other hand, went down by 16% YoY to P1.1 bn due to the drop in average levels of high- cost deposits and lower borrowings as the bank exercised the call option on the P1.3 bn unsecured subordinated loans in September 2011.
As a result of the foregoing and higher impairment losses booked for the quarter in review, net interest income after impairment losses declined by 4% YoY to P1.6 bn.
Non-interest income for the quarter soared to P3.9 bn from P1.2 bn a year ago, driven primarily by hefty trading gains. Higher premium revenues also contributed to the significant increase in non-interest income due to the higher sales of its subsidiary’s pre-need plans. The corresponding trust fund contributions of said plans, salaries and employee benefits in support of the bank’s expansion initiatives, taxes and licenses drove operating expenses to increase by 31% YoY.
UnionBank's asset base stood at P260.1 bn as of end of March 2011, with a deposit level of P190.3 bn and a loan book of P115.2 bn. The bank's capital adequacy ratio and Tier 1 ratios further strengthened to 19.7% and 16.9%, respectively.
“Anticipating continued market volatility this year, UnionBank will continue to exploit trading opportunities to augment the earnings from our lending business as we did in the first quarter,” Aboitiz said.
AEV’s non-listed thrift bank, City Savings Bank (CitySavings), contributed earnings of P99 mn during the quarter, down by 4% YoY. Net interest income grew by 18% YoY to P320 mn, mainly attributable to the robust growth in the bank’s interest income on loans and services, which expanded by 28%, from P387 mn to P493 mn.
The implementation of CitySavings’ expansion program and various initiatives pushed up operating expenses by 27% YoY, which weighed down the bank’s overall profitability. The bank ended the quarter with a loan book of P10.9 bn and total resources of P15.8 bn, up by 10% and 21% from year-end 2011 levels, respectively. NPL ratio for the quarter ending March 31, 2012 was roughly at 1% while the NPL coverage ratio was at 129%. Total capital funds amounted to P1.9 bn with a capital adequacy ratio of close to approximately 15%.
Food
AEV food subsidiary Pilmico Foods Corporation, recorded a 22% YoY decline in its first quarter income contribution, from P282 mn to P219 mn. The flour business logged a 12% YoY increase in its income contribution given the 4% YoY expansion in both volume sales and gross margin. Higher input costs resulted to a 9% YoY drop in the feed unit’s bottomline. Poor market condition, i.e. lower average selling price and higher input costs, coupled with lower volume sales saw the swine unit ending the quarter with a negative income contribution.
Financial Condition
For the quarter ending March 31, 2012, the AEV’s total consolidated assets amounted to 207.9 bn, 3% higher than the 2011 yearend level. Cash and cash equivalents amounted to P34.8 bn, 18% higher than yearend 2011 level of P29.5 bn. Consolidated liabilities totaled to P107.2 bn, while Equity Attributable to Equity Holders of the Parent increased by 6% to P81.7 bn. Current ratio as of March 31, 2012 was at 3.5x (versus year-end 2011’s 3.0x), while net debt-to-equity ratio was at 0.5x (versus year-end 2011’s 0.6x).
Corporate Social Responsibility
Alongside the growth of AEV’s businesses is its stronger commitment to corporate social responsibility (CSR).
“CSR is an integral part of our business model. Our philosophy is such that the success of our business should benefit all our stakeholders, including our communities. We feel it is imperative that we match our business expansion with investments in our communities and in health, education and other facilities,” said Aboitiz.
The Aboitiz Foundation almost tripled its budget for CSR groupwide projects from P95 mn in 2010 to P280 mn in 2012. “As the Aboitiz Group grows, its CSR initiatives should also reach wider across the country, serving more communities and enriching more lives,” he added.
AEV is the publicly listed holding and investment company of the Aboitiz Group with major investments in power, banking and food. Two of its investee companies are also listed on the Philippine Stock Exchange. AEV is consistently recognized in international surveys as among the Philippines’ best managed companies and has also been cited for its commitment to good corporate governance. (www.aboitiz.com)