earnings reports

Virus disrupts Aboitiz, profits down 55% in H1 2020

Ralf Rivas
Aboitiz CEO Sabin Aboitiz looks forward to a better economy in the 2nd half of the year as the country slowly opens up

Aboitiz Equity Ventures (AEV) saw a 55% drop in its earnings in the 1st semester of 2020, mainly due to the impact of the coronavirus pandemic.

AEV raked in just P4 billion in the 1st half, much lower than the P9 billion it earned in the same period a year ago.

The decline in group earnings was driven by the income drop of AboitizPower, its largest revenue contributor.

Power accounted for 49% of the total income contributions, followed by banking and financial services (39%), food (14%), infrastructure (-1%), and land (-1%).

“The current COVID-19 crisis continues to disrupt and impact our organization in different ways. Throughout this, we have given significant attention to our ability to adapt to changes and to prepare for uncertainties,” said Sabin Aboitiz, Aboitiz group president and chief executive officer.

AEV earlier announced layoffs due to the pandemic.

The Aboitiz CEO looks forward to a better economy in the 2nd half of the year as the country slowly opens up and adapts to the new normal. 

Power

AboitizPower recorded a net income of P1.7 billion for the 2nd quarter of 2020, 67% lower than the P5 billion recorded in the corresponding period in 2019.

On a year-to-date basis, AboitizPower’s net income for the 1st half of 2020 was P3.7 billion, 57% lower than the P8.6 billion recorded a year ago.

AboitizPower’s net income contribution to AEV for the 1st half of 2020 decreased by 57% from P6.7 billion to P2.9 billion, primarily due to reduced demand resulting from the enforcement of coronavirus-related community quarantines, as well as forced outages during the period.

Banking

UnionBank recorded a net income of P4.5 billion in the 1st half of 2020, 6% lower than the P4.8 billion recorded in the same period last year. 

The income contribution of UnionBank to AEV for the first 6 months amounted to P2.3 billion, 3% lower than the P2.4 billion a year ago.

Revenues were up 55% to P22.1 billion, driven by the sustained increase in net interest income, as well as higher trading gains for the year. 

UnionBank further increased provisions for loan losses to P7 billion in the 1st half of the year, in anticipation of loan defaults due to the pandemic.

Food

AEV’s non-listed food subsidiaries Pilmico Foods, Pilmico Animal Nutrition, and Pilmico International contributed P795 million for the 1st half of 2020 to the parent holding firm, 44% higher than the P552 million recorded in the same period in 2019.

The increase was due to contributions from the feeds and flour businesses, as well as Pilmico International, which saw a 205% increase in its earnings.

The farms business segment, however, reported a net loss of P501 million due to decreased selling prices and sales volume resulting from the spread of African swine fever in Luzon, as well as a decline in margins following higher farms and meat processing costs.

Land and infrastructure

AboitizLand and its subsidiaries reported a net loss of P39 million for the 1st half of 2020, versus P60 million in income recorded during the same period last year.

AboitizLand contributed P1.1 billion in revenues, 20% lower than the contributions it made in 2019.

Its residential business felt the impact of the slowdown and restrictions in operations caused by quarantines.

The company’s construction activities were brought to a standstill during the 2nd quarter of 2020.

For the Infrastructure group, Republic Cement and Building Materials reported a net loss of P10 million to AEV for the 1st half of 2020, compared to P249 million in income recorded during the same period last year.  

This was due to the contraction in the demand for cement as construction activities dramatically slowed down. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.