ASF takes a toll on Aboitiz food unit

Published August 18, 2019, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

The deadly pork disease African Swine Fever (ASF) has taken a toll on the operations of Pilmico Foods Corporation, the food and agribusiness subsidiary of Aboitiz Equity Ventures Inc. (AEV), but a top official said the company is now in the process of recovery after a few adjustments.

AEV Chief Operating Officer Sabin Aboitiz said in an interview that Pilmico already implemented some adjustments as part of the integration of its operations with Singapore-based agribusiness firm Gold Coin Management Holdings Ltd., which it fully acquired earlier this year.

Gold Coin, which manufactures animal feeds, operates in different countries namely China, Vietnam, Indonesia, Malaysia, Singapore, and Sri Lanka. Unfortunately, two of these countries have already been hit by ASF.

“We just finished buying out. The normal capex [capital expenditure] we’re changing it because of the ASF. We’re switching a lot of our hog lines to duck lines and chicken lines. A lot of money is going there to be able to sustain the growth,” said Aboitiz.

ASF] definitely brought down our sales for the swine because the swine is reduced. China and Vietnam were affected… but now we are starting to pick up again as we move into other lines,” he added.

ASF, a deadly hog disease which has no vaccine or cure, has been destroying the hog industry of so many countries. Just four days ago, Myanmar reported its first case of ASF, making it the seventh country in Asia hit the virus after China, Vietnam, Cambodia, North Korea, Hong Kong, and Laos.

Other countries with ASF are Poland, Belgium, Zambia, South Africa, Czech Republic, Bulgaria, Mongolia, Moldova, Hungary, Latvia, Romania, Russia, and Ukraine.

It was just in May when Pilmico completed its 100 percent acquisition of Gold Coin for $550 million, effectively expanding its footprint in the Asia-Pacific region.

Aboitiz said that once finished, the fully merged operations of Pilmico and Gold Coin would definitely improve the contribution of AEV’s food business to the total earnings of the listed conglomerate.

“By next year, we should have cleaned it out. You know when you buy something, you have to fix and clean [the operations]. And this year is about that,” Aboitiz further said.

AEV’s food business only contributes 6 percent to the total profit of the Aboitiz group.

In the first six months of this year, AEV booked a lower net income of P9 billion, dragged by its power business which accounts for as much as 67 percent of the group’s total income contributions.

During the period, the firm’s food subsidiaries’ namely Pilmico Foods Corporation, Pilmico Animal Nutrition Corporation, and AEV International Pte. Ltd. (AEVI) contributed P552 million to the group, a 17 percent decrease from the P662 million last year.

Of the food group’s total earnings, 30 percent come from offshore business, a big jump from only 1 percent contribution in the previous year. This huge increase was a result of Pilmico’s acquisition of Gold Coin.