results of operations - Aboitiz

RESULTS OF OPERATIONS
FROM YOUR CHIEF OPERATING OFFICER
Growth
POWERED FOR
Despite the challenges,
the power group
continued to be the
largest contributor
to AEV's income,
turning in π2.26
billion, up 12% from
2005. This represents
56% of the total
income contribution
from AEV's various
business segments.
Dear Shareholders and Friends,
Aboitiz Equity Ventures, Inc. (AEV) ended 2006 with a net
income of P3.7 billion, a 19% increase from 2005. This translates
to an earnings per share (EPS) of π0.76. Earnings before interest,
taxes, depreciation and amortization (EBITDA) increased by 7%
reaching π7 billion.
POWER GROUP
The power group had a slow start in 2006 and as projected,
growth in electricity consumption remained benign throughout
the year. The hydro projects we are developing in Davao
encountered some delays. The privatization process of the
Napocor assets did not proceed as fast as expected. Despite
these challenges, the power group continued to be the largest
contributor to AEV’s income, turning in π2.26 billion, up 12% from
2005. This represents 56% of the total income contribution from
AEV’s various business segments.
The year’s highlight was AEV’s winning the bid for the 360-MW
Magat Hydro Power Plant in December 2006. The acquisition
was very strategic for AEV and will more than double the
generation capacity of Aboitiz Power Corporation bringing it to
390 MW of beneficial ownership.
Distribution Companies
The combined income of AEV’s power distribution companies
in 2006 was π1.18 billion, up by 21%. The group sold a total of
3,498 gigawatt-hours (Gwhrs), an increase of 2.5% percent over
2005. These power utilities provided electricity to 617,106
customers across the country, 3% more than the previous
year. Over the last 9 years, annual kilowatt-hour (kwh) sales
posted a compounded growth rate of 7%.
Davao Light and Power Company (DLPC) contributed a profit of
π809 million, 19% higher over 2005. DLPC’s kwh sales of 1,269
Gwhrs was up very slightly in 2006. The number of customers
increased by 2.9% to 238,612. Peak load increased to 238 MW
from 230 MW of the previous year. System losses increased
slightly to 8.89% from 8.45% in 2005, but still within the 9.5%
mandated cap set by law.
10 ABOITIZ EQUITY VENTURES ANNUAL REPORT 2006