Beneficial EBITDA: PHP73.3 billion, 13% higher than 2023. Net Income: PHP33.9 billion, 2% higher than 2023. Net Debt to Equity Ratio: Improved to 0.84 times from 0.92 times in 2023. Power Generation Capacity: 5 gigawatts by the end of 2024. Renewable Energy Capacity: 1.4 gigawatts of total portfolio. Revenue from Generation Segment: Declined 11% year on year to PHP159 billion. Gross Profit of Generation Segment: Increased by 12% to PHP16.1 billion. Distribution Utilities Volume Sales: Rose by 8% year on year. RES Segment EBITDA: Increased by 9% to PHP2.9 billion. CapEx Deployment: PHP26.6 billion in 2024. Dividend: Record high regular cash dividend of PHP2.35 per share.

Warning! GuruFocus has detected 5 Warning Signs with ABZPY.

Release Date: March 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Aboitiz Power Corp (ABZPY) recorded a beneficial EBITDA of PHP73.3 billion for 2024, a 13% increase from 2023. The company energized five renewable energy projects and broke ground on two more solar projects in 2024. Net debt to equity improved to 0.84 times by the end of December 2024 from 0.92 times at the end of December 2023. Aboitiz Power Corp (ABZPY) secured long-term power supply agreements totaling 1.2 gigawatts, increasing contracted baseload portfolio to 90% by the end of 2025. The company maintained a strong balance sheet and announced a record high regular cash dividend of PHP2.35 per share for 2025.

Negative Points

Revenue contribution from the generation segment declined 11% year on year to PHP159 billion due to lower BCQ rates and spot prices. Energy sold to bilateral contracts declined 11% year on year due to the expiry of contracts, leading to increased exposure to the spot market. The company faced a slowdown in demand from industrial sectors like steel and cement, affecting its distribution business. CapEx deployment in 2024 was lower than initially budgeted due to project timing adjustments. Spot market prices are expected to trend downward, which could impact margins despite efforts to secure long-term contracts.

Q & A Highlights

Q: What was the reason for the improvement in gross margin per kilowatt hour for 2024 despite lower spot prices? A: The improvement in gross margin was primarily due to a decrease in fuel costs. While most bilateral contracts have fuel pass-through provisions, the spot exposure allowed for margin expansion as fuel prices decreased faster than spot prices. (Juan Aboitiz, CFO)

Q: Would you expect this gross margin per kilowatt to be maintained for 2025? A: Yes, we expect to maintain robust margins through long-term contracts that will start delivering at various points in 2025. The first half of the year will still have spot exposure, but this will decrease as new contracts begin. (Juan Aboitiz, CFO)

Story Continues

Q: What is your CapEx guidance for 2025? A: Our CapEx guidance for 2025 is approximately PHP78 billion, with 65% to 70% earmarked for the renewable energy pipeline. (Juan Aboitiz, CFO)

Q: How does AP plan to fund its portion of the Chromite deal? A: The acquisition was funded through a combination of cash and short-term bridge debt. We plan to refinance this debt through an upcoming bond offering. (Juan Aboitiz, CFO)

Q: Are there any expiring bilateral contracts, and what are your plans for replacing them? A: We have about 300 megawatts of baseload contracts expiring in 2025. Our strategy is to recontract this volume and increase contracting levels to enhance cash flow predictability. We expect to reach about 90% contracted baseload capacity by year-end. (Juan Aboitiz, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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