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Strong power business leads AEV’s 9% profit rise to P1.2B

By Riza Recio

05/07/2008

Aboitiz Equity Ventures Inc. (AEV) ended the first quarter with a profit of P1.18 billion, up 9 percent from a year ago.

AEV unit Aboitiz Power Corp. (AP) continued to account for the bulk of AEV’s income at 67 percent followed by the banking group at 21 percent. The food group continued to be a stable source of earnings with a 14 percent income share, while the transport group turned in a negative contribution for the period in review.

Despite AEV’s reduced ownership in AP, the power group’s income contribution for the quarter grew 83 percent to P761 million on the back of consolidated total revenue growth of 41 percent on year.

AP’s power generation business ended the quarter with a net earnings contribution of P481 million, up 429 percent on year. AEV attributed the strong showing to the P439-million earnings contribution provided by acquisitions made by the company in 2007. Leading the pack was the 360 megawatts (MW) Magat hydro plant, which turned in significant profit contributions as it realized favorable average selling prices at the electricity spot market.

With a 200-percent expansion in its attributable generating capacity, from 164 MW to 490 MW, AP recorded a 942-percent year-on-year expansion in energy sales, from 36 gigawatthours to 377 GwH.

AP’s power distribution business contributed net earnings of P288 million to AEV, down 11 percent mainly due to AEV’s ownership dilution in its power subsidiary. AP’s distribution utilities continued to record healthy electricity sales growth rates with the first quarter posting a 17-percent year-on-year improvement, from 633 GwH to 744 GwH.

Excluding the sales contribution of the distribution utilities acquired last year, the group recorded an organic growth of 7 percent on year.

The financial services group contributed net earnings of P232 million for the first quarter, 61 percent lower than previous year’s P599 million. Union Bank of the Philippines ended the quarter with an earnings contribution of P222 million, 62 percent lower than the first quarter of 2007.

The decline was primarily due to the base effect of the large trading gain that the bank realized in the same period last year. Core bank earnings and operating cost enhancements were the main drivers of the bank’s earnings performance for the quarter in review.

AEV’s non-listed thrift bank, City Savings Bank, contributed earnings of P10 million during the period in review, down 39 percent from the same period last year.