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Market Reports


November 11, 2019

 

Foreign contribution to Aboitiz food group earnings doubles 

 

 

The food group of Aboitiz Equity Ventures, Inc. (AEV) has turned more international with 31% of the group's total earnings in the first nine months this year generated offshore nearly doubling the 17% share in the same period last year, Manila Bulletin reported.

 

Meanwhile, the income contribution of AEV's non-listed food subsidiaries — Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and AEV International Pte. Ltd. (AEVI) — amounted to ₱1 billion (~US$0.02 billion; ₱1 = US$0.02) for the first nine months of 2019, a 31% decrease from the ₱1.5 billion recorded in the same period last year.

 

This was attributed to declines from the Feeds and Farms business segments, which fell due to higher manufacturing costs and operating expenses, and decreased margins following increased feed costs and lower live hog selling prices, respectively.

 

However, Pilmico International Pte. Ltd., a subsidiary of AEVI, delivered a net income of ₱683 million in the first nine months of 2019, 84% higher year-on-year due to higher full nine-month income contributions from Gold Coin Management Holdings, which was acquired during the second quarter of 2018, and Pilmico Vietnam Feeds' increase in margins due to higher selling prices and reduced raw material cost.

 

As a result, 31% of the food group's total earnings in the first nine months this year were generated offshore versus 17% recorded in the same period last year.

 

Tristan Aboitiz, chief operating officer of Pilmico Foods Corp., expressed certainty of the direction of their food business following their acquisition of Gold Coin last year.

 

"The acquisition has kind of redefined our food business because if we look at the capacity of Gold Coin it is three times bigger than Pilmico and is present in six or seven countries and caters to different sectors," said Aboitiz.

 

He added that Gold Coin will continue to expand in countries that they are in, including the Philippines.

 

While the group's food business is going more international, Aboitiz said the domestic business will also continue to grow with the expansion of Philippine facilities to raise capacities. They will commission end November a meat processing plant in Tarlac to scale up production and to produce more value-added products.

 

He acknowledged though that the outbreak of African swine fever (ASF) has caused uncertainty in the industry and would put a question mark on its Feeds and Farms division's performance.

 

"If the situation continues, then it will be a challenging first half of next year but we could also recover in the second half," he opined.

 

They would also pursue export potential in Singapore and other countries and to produce more halal products. "I just don't know how the ASF situation will complicate in the short term," he said noting that the initial "shock and awe" caused by the virus has affected the industry.

 

The public's general skepticism on pork and the two provincial bans on shipment of pork and pork products from Luzon have since affected the local swine industry.

 

Aboitiz, however, said that it is premature to tell noting that the ASF outbreak only started in September.

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