Aboitiz is one of the oldest business families in the Philippines. They date back 130 years.
The first Aboitiz was a Basque Spaniard, Paulino Aboitiz. He arrived in the Philippines in the 1870s. He married a daughter of a rich merchant, founded in 1920, Aboitiz & Co., and began building the family business, starting with abaca trade, first in Ormoc, Leyte and then Cebu, and later into inter-island shipping to bring goods across the Visayas. Shipping was completely divested in 2016. Paulino had a son, Don Ramon (1887-1974), regarded as the original family patriarch. Ramon’s dictum was: “Any business where we can make money, we will go into.” Don Ramon had “palabra de honor” (word of honor).
During World War I when falling abaca prices brought Aboitiz & Co. to near bankruptcy, Don Ramon resisted pressures to walk away from their contracts. He told his sibling: “The biggest fortune I have is my word and reputation. Money can be lost and can be recovered, but once your name and reputation is lost, one’s word is worthless and one is truly finished”.
Without that determination to survive business hardships with hard work and a commitment to honor their word and reputation, the Aboitiz Group would not be around today.
At the helm today of the family holding company, Aboitiz Equity Ventures Inc., which was incorporated in 1989 and went public in 1994, is Erramon I. Aboitiz, 60, president and CEO since 2009. From 1994 to December 2008, he was AEV EVP and COO.
The family owns 56.1 percent of AEV which has a market cap of P411.54 billion, yielding for the family P230.87 billion wealth or $4.52 billion.
Erramon is gentle, warm, humble, with a keen mind. He has a bachelor of science degree in business, major in accounting and finance, from Gonzaga University in Spokane, Washington.
He is a cousin of Jon Ramon Aboitiz, 68, the previous CEO, for 14 years (1994-2008). Erramon’s reign as CEO has been extended until 2019. He is good. In his first year as CEO, in 2009, revenues climbed 29 percent to P46.23 billion, but profits climbed much faster, by 102 percent, to P8.3 billion. In 2016, revenues rose only 4.6 percent to P116.5 billion but profits still rose much faster, by 27 percent to P22.4 billion. EBITDA is P48 billion, up 20 percent.
Aboitiz has four major businesses—power (Aboitiz Power, No. 1 in the south), food (Pilmico, a Top 3 in flour), banking (Union Bank, hugely profitable and a leader in cash-less banking; No. 6 bank in deposits and No. 8 in assets and loans), and real estate (Aboitiz Land which specializes in industrial estates and high-end development).
A fifth leg was recently added—infrastructure (AboitizInfraCapital), to cash in on President Duterte’s Build, Build, Build P8.4-trillion five-year infra program. The group has Apo Agua to supply bulk water to Davao.
In 2015, AEV bought Republic Cement from LaFarge and is spending $250 million to expand its capacity over the next five years. It wanted to run Metro Manila’s LRT2 and build a dam and a highway around Laguna Lake. Both fizzled out.
A clan rule is that every Aboitiz must pitch into the business. Those who don’t don’t get a share of the profits.
In over 100 years of doing business Aboitiz has been consistent in seeking positive change for all its stakeholders, change for a better world and contribution to the greater good.
“We have always found ourselves leading, influencing, and driving change for the benefit of our fellow Filipinos, our communities, and our nation,” says AEV’s 2016 annual report.
In The Aboitiz Way, “our actions and decisions are anchored on our time-honored values of integrity, teamwork, innovation, and responsibility,” says the company. “It is a culture that we deeply value and clearly understand that drives our behavior and performance, and ultimately, is the key to the success of our enterprise.”
And so the group has gone on planting 5.3-million trees, and investing P286 million last year in education, health care, and sustainability for the good of the community.
A key to Aboitiz’s focus on being kinder and gentler is their main business: power. The group sells 3,950 megawatts of electricity; half of that comes from coal. Power is the bulk of AEV business, being No. 2 in power generation.
It is also the second largest power distributor in the Philippines, distributing 6,746 MWh to with more than 900,000 customers in 2016.
Power (generation and distribution) contributed 76 percent of AEV revenues and P15.38 billion in profits in 2016, up 13.7 percent from 2015.
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