Conglomerate Aboitiz Equity Ventures Inc. plans to boost the income contribution of each strategic business units to 15 percent to 20 percent to reduce the company’s dependence on the power sector.
AEV chief finance officer Manuel Lozano said in an interview over the weekend the company wanted other subsidiaries like infrastructure, financial services and food to eventually increase their contribution to the total business amid the conglomerate’s aggressive expansion plans.
“Eventually what we really like to see is our other subsidiaries like food, financial services and infrastructure, for each of them to become 10 to 15 percent and even up to 20 percent so power does not dominate the contributions so much,” Lozano said.
The company may not find it easy to reduce the income contribution of the power business because of expansion plans both here and abroad, but Lozano sees its share at less than 50 percent by 2025.
Power accounted for 67 percent of the conglomerate’s income in the first half of the year, followed by banking and financial services which contributed 24 percent, food at six percent, infrastructure at two percent, and land at one percent.
Lozano expects the income contribution of the food business to reach 10 percent in the near future following the firm’s acquisition of Gold Coin Management Holdings Ltd., one of Asia’s largest privately-owned agribusiness corporations.
The group is also adding other components to its infrastructure portfolio, like airports, water and common tower businesses.
Only the company’s cement business under Republic Cement & Building Materials Inc. is currently is in the infrastructure group so far.
The company has two pending unsolicited proposals—the P42.7-billion Laguindingan Airport in Misamis Oriental and the Bohol-Panglao International Airport project.
The company started construction of the Apo-Agua bulk water supply project in Davao City. The project is scheduled for completion by 2021.
The company, meanwhile, has ventured into the common tower business that aims to improve the mobile connectivity across the country.
Lozano said the company was initially looking at the company’s existing sites for the rollout of cell towers.
AEV posted a net income of P9 billion in the first six months of 2019, down 11 percent from P10.1 billion year-on-year.
The conglomerate recognized non-recurring gains of P78 million against P467 million in non-recurring losses in the previous period, representing the foreign exchange differential in restating dollar-denominated net debt.
Without the one-off gains, AEV’s core net income in the first half of 2019 was P8.9 billion, down 16 percent from P10.6 billon on year.