Aboitiz sees growth amid economic crisis

By Ehda M. Dagooc Updated January 21, 2009 12:00 AM

Cebu-based conglomerate Aboitiz Equity Ventures (AEV) may have been preparing for the (possible) effect of the global economic disaster this year, but the group still sees growth of its businesses, and retrenchment measure is a far-fetch idea.

The entire Aboitiz Group has about 20,000 employees around the country, including those employed by its overseas partners, said AEV president and chief executive officer (CEO) Erramon Aboitiz.

While other companies in the world are doing massive retrenchments to stay afloat amid the economic difficulties, Aboitiz said the Group is in fact, in the “hiring mode”, as most of its businesses are more resilient.

“We have power plants coming on stream, and several of our businesses are on the hiring mode,” Aboitiz said in a press conference.

The power group, for instance, is seeing sustained growth this year, along with other subsidiaries like food (Pilmico Foods Corporation), real estate (AboitizLand of Aboitiz and Company), and banking (Union Bank), among others.

Aboitiz believes that the highly publicized global economic crisis is just a temporary “bump on the road,” and the company is optimistic of its growth, while the Philippines is still maintaining healthy environment for most businesses.

Clearly, some sectors in the Philippine economy are affected like manufacturing and exports but other industries are still expecting growth. “Overall, we still think a little bit of growth this year.”

Aboitiz said the feed consumption, and flour milling demand is still on upswing, real estate demand is strong, so as power.

“At the end of the day, when the dust settles, we’d like to see that there is still growth, although it may be much lower than previous years,” added Erramon, who recently replaced the position of Jon Ramon Aboitiz as AEV’s president and CEO, following Jon’s retirement in December last year.

In fact, the company is allocating a much higher capital expenditure (capex) this year, more than what it spent in 2008. However, Aboitiz refused to divulge the concrete amount, only said that for its power subsidiary Aboitiz Power Corporation (AP), it is going to raise P2 billion to P3 billion from retail market to issue bonds within the year.

Already AP has generated about P3.9 billion from fixed rate it floated last year. This and the other P3 billion it hopes to raise from the upcoming bond issuance, will fund the company’s power generation expansion, including acquisition of power plants, including its interest to bid for the National Power Corporation (Napocor).

“It’s business as usual [for us]. We may expect slowdown this year, but our planning is long term, beyond 2009,” Aboitiz said.

In 2007, the company reported a 54 percent increase in profit or P5.8 billion from P3.8 billion in the previous year.

Strong operating results of the power and banking groups drove AEV’s robust performance, accounting for 61 percent and 23 percent of total income contribution from its business groups, respectively, in 2007.