Aboitiz follows Ayala, trims capex plans in 2020 as coronavirus bites
Sabin M. Aboitiz
The STAR/File photo

Aboitiz follows Ayala, trims capex plans in 2020 as coronavirus bites

Ian Nicolas Cigaral (Philstar.com) - April 27, 2020 - 7:03pm

MANILA, Philippines — Diversified conglomerate Aboitiz Equity Ventures Inc. (AEV) on Monday joined a growing list of companies that have slashed capital investments this year, as local firms begin to count the costs of work stoppages resulting from local and national lockdowns meant to control the coronavirus' spread.

Following Ayala Corp.'s announcement last week of a 36.4% cut on its capital expenditures to P70 billion, AEV said the company's capex plans will also be trimmed to P47 billion in 2020, down by a third from the P73 billion originally set aisde, and lower than the P53 billion spent last year.

Across its growing portfoliio, AEV said most capex reductions will come from its infrastructure, power and land units. Apart from these industries, AEV also has interests in banking, food, property and construction. 

The budget cuts would mostly cover operating, maintenance and expansion costs. “The new capex moves back some spending, considering the (outbreak’s) impact on the group’s and country’s future growth,” AEV said in a statement.

The entire Luzon has been in lockdown for nearly 45 days, and come May 1, Metro Manila will remain under strict quarantine rules that have restricted people movements, shuttered businesses, and kept most consumers indoors.

Apart from Metro Manila, 22 other areas, including Davao in Mindanao, will be kept under enhanced community quarantine until May 15, while 59 other areas will be under a relaxed general quarantine, although construction activities will still not be permitted.

Despite the disruptions triggered by the health crisis, Aboitiz Group President and CEO Sabin Aboitiz told stockholders that funding this year's reduced capex won’t be a huge financing headache for the company, stressing that “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,” Aboitiz said.

For the entire 2019, AEV booked a net income of P22 billion, a tad lower than the P22.2 billion recorded in 2018, a rather a notable performance considering how revenues from its power business sagged a fifth year-on-year to P13.3 billion.

While the energy segment of AEV contributed 57% of total income last year, 30% came from financial and banking industry where the digitalization of UnionBank of the Philippines has started growing returns for the holding company.

“Digital infrastructure investments in previous years and regular business continuity planning has allowed us to cope with the adverse impact of COVID-19,” Aboitiz said.

“While it’s anyone’s guess how the future will unfold, we assure our stakeholders that we are fully equipped and prepared to guarantee the continuity of all business transactions,” he added.

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