Higher forex losses, weak margins put a dent in Aboitiz food group’s earnings

The food subsidiaries of Aboitiz Equity Ventures Inc. continued to post dismal financial results as its net income contribution in the nine months through September plunged 83 percent to P260 million.

The group is comprised of Pilmico Foods Corp., Pilmico Animal Nutrition Corp., and Pilmico International Pte. Ltd., which includes Gold Coin Management Holdings Pte. Ltd.

Despite rising input costs due to sharp increase in commodity prices (soybean meal, wheat, etc.), the group recorded an EBITDA of ₱4.2 billion, down 14 percent due to margin recoveries from its agribusiness, farms and commodity trading segments.

Earnings of the food and nutrition segment, which consists of the flour, farms, meats, and trading divisions, declined by 85 percent to ₱103 million, largely due to lower taxes recognized for its farm division in the same period last year from tax adjustments pertaining to its 2020 income tax holiday incentives, the flour division’s weaker margins and higher foreign exchange losses due to the depreciation of the peso impacting its US dollar denominated payables from raw material purchases.

The agribusiness segment, which consists of the regional animal nutrition businesses (feed, petfood, and specialty nutrition), incurred a net loss of ₱78 million,108 percent lower year on year.

The decline was due to the recognition of unrealized foreign exchange losses from the devaluation of the Sri Lankan Rupee and goodwill impairment of its Sri Lanka and Thailand operations.

Excluding the one-off events from the Thailand and Sri Lankan operations and the foreign exchange losses from the deprecation of the peso, the food group would have posted a net profit of ₱1.7 billion, which would have been flat year on year.

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