ABOITIZ Equity Ventures Inc. (AEV) has cut its capital expenditures to P47 billion from an earlier announced P73 billion
The company said it is “carefully weighing opportunities and further embracing an agile strategy in the execution of its 2020 plans” in the backdrop of the ongoing global threat of the new coronavirus disease 2019 (COVID-19).
Sabin Aboitiz, Aboitiz president, said the amount “moves back some spending, considering the impact on the group’s and country’s future growth.”
Cuts in infra, power
Most of the capex reductions are in the infrastructure, power, and land units.
“These mostly covered operating, maintenance, and expansion costs,” said Aboitiz.
At present, Aboitiz Power Corp.’s power generation and power distribution facilities continue to operate 24/7 nationwide, delivering much-needed energy to areas under enhanced community quarantine (ECQ), noted Aboitiz.
“While the country’s total demand for power has dipped since the start of the ECQ, we are seeing an increase in consumption due to higher temperature. We also expect a gradual increase in demand as we adjust to the gradual easing of the quarantine,” said Emmanuel Rubio, AboitizPower president.
Rubio said unit 1 of GNPower Dinginin, an ongoing AboitizPower project, will synchronize by the fourth quarter of 2020 and will commence commercial operations by the first quarter of 2021.
Unit 2 will synchronize by the first quarter of 2021 and will commence commercial operations by the second quarter of 2021.
Digital transformation
The banking business under Union Bank of the Philippines leverages its successful digital transformation strategy in addressing the challenges posed by the COVID-19 crisis with a large percentage of its branches remaining open, according to Edwin Bautista, UnionBank president.
“UnionBank’s balance sheet remains strong enough to withstand significant financial impact, given its strong income results in 2019,” he added.
Bautista said the crisis has accelerated the coming of the digital world as the bank saw its digital customers increasing tenfold during the ECQ.
UnionBank had announced an upgrade of its existing UnionBank Online application to now enable users to directly transfer funds nationwide to remittance centers such as Cebuana Lhuillier, LBC, PeraHub, and soon, Palawan Express. This is very useful for clients who may need to transfer funds in areas under ECQ.
In the food business under Pilmico Foods Corp., plants in Tarlac and Iligan, as well as the company’s swine and poultry farms, continue to be operational since the start of local ECQs. Despite challenges, Pilmico continues with its operations and helps stakeholders meet their needs, the group said.
An e-commerce platform has also been launched in order to widen its reach and serve customers in Metro Manila.
Integration
For 2020, AEV said the food group will continue the integration of Pilmico and Gold Coin, optimizing synergies in procurement, cross-selling across countries, and shared services in its corporate services units, and opening opportunities for the Aboitiz Group as a whole.
The infrastructure business under Aboitiz InfraCapital Inc. is closely reviewing the impact of COVID-19 on its projects especially in the airport sector, AEV said.
For its bulk water supply unit Apo Agua Infrastructura Inc., the group said it is closely coordinating with its contractors on which specific work streams can be executed amid Davao City’s ECQ, recovery time, and any implications on obligations with Apo Agua’s partners.
The realty business under Aboitiz Land Inc. continues to prepare for an expected upswing in commercial real estate demand with its continuous planning of integrated townships such as LIMA Estate in Lipa City, Batangas, where it plans to develop commercial buildings and sell commercial lots in its upcoming business district.
AboitizLand’s industrial business unit also expects fresh demand for new distribution centers and warehouse-type logistics facilities, especially as e-commerce booms. Aside from the said opportunity in the logistics space, there is an emerging demand related to manufacturing companies planning to exit China, it said.
“Expansion plans to create additional inventory are underway for LIMA Technology Center in Batangas, and West Cebu Industrial Park in Cebu, to take advantage of this demand,” it added.
Overall, AboitizLand expects the local real estate market to be quite resilient, with the large unmet demand for housing a significant contributing factor. AboitizLand’s early investments in contactless residential sales and marketing continues for the year and are now paying early dividends, according to AEV.
AEV said the group’s privately-held construction arm Aboitiz Construction Inc. continues to operate and work on its projects in Balamban, Cebu, and Mindanao, albeit with stricter precautions.
“The company hopes to immediately resume work on all its first and second quarter projects in ECQ-affected areas. This is in line with the Aboitiz Group’s goal of keeping the economy stimulated with the immediate implementation of the government’s infrastructure program, especially projects of national significance,” AEV said.
The Aboitiz Group is optimistic it can weather potential headwinds, according to the company.
“Most of our businesses are in industries that are vital to keeping the economy running. Filipinos need electricity, food products, and money, for example. And for our other businesses, we have been prudent in capital expenditure spending so this should not be much of a problem,” it said.
P900M assistance
AEV said it has earmarked P900 million in assistance (early release of end-March salary and the 13th or 14th month pay) to help its team members cope with the COVID-19 pandemic.
Under the Department of Energy’s new Department Circular No. 2020-04-00080, communities that host power generation projects can now use their Energy Regulations 1-94 (ER 1-94) revenue shares from these facilities to combat the effects of COVID-19.
AEV said about P500 million worth of ER 1-94 funds are currently available for AboitizPower’s host local government units for their COVID-19 response efforts.
In addition, about P400 million in monetary and in-kind assistance were extended to serve affected communities as well as medical and government frontliners nationwide.
“To date, the Aboitiz Group has contributed P1.8 billion for its COVID-19 response efforts. This excludes various payments waived, reduced, extended, or restructured to help customers cope with the impact of COVID-19,” it said.
