Aboitiz Equity Ventures, Inc. (AEV) Earnings Call Transcript & Summary

Hello, everyone. Welcome to our analysts' briefing. Today, we're going to report the financial and operating performance for the third quarter of 2022 for our publicly-listed companies, namely Aboitiz Equity Ventures, AboitizPower and UnionBank; as well as our nonlisted businesses, namely our One Food Group, AboitizLand, Aboitiz InfraCapital and Republic Cement. But first, here are the house rules. All microphones are put on mute by default to minimize unnecessary background noise. Questions have been requested from our guests in advance. These will be prioritized in the Q&A today. If you have additional questions, please submit them through the Q&A button on the webinar controls. Questions submitted now will be answered at the end of the presentations if there is enough time. Those not taken up during the Q&A will be answered via e-mail. The briefing will be recorded for documentation purposes. By joining this session, you can send your name, voice, image and chat comments being recorded for use in dissemination. If you do not consent to the foregoing, please do not join the session. The program will go as follows. To present for Power, we will have Mr. Manny Rubio, President and CEO of AboitizPower. To present for banking, we will have Mr. Toto Hilado, CFO of UnionBank. To present for Food, we will have Mr. Tristan Aboitiz, President and CEO of Food Group Philippines. To present for Land, we will have Mr. Dave Rafael, President and CEO of AboitizLand. To present for Infrastructure, we will have Ms. Cosette Canilao, President and CEO of Aboitiz InfraCapital. To present for Cement, we will have Mr. Roman Menz, President and CEO of Republic Cement. To present AEV's consolidated financials, we have Mr. Dmi Lozano, CFO of Aboitiz Equity Ventures. At the end of the presentation, we will conduct a Q&A session. And at the end of the event, when the Zoom platform closes, a pop-up screen will appear, which will allow you to provide feedback regarding the event. And now on to our presentation.

Thank you, Judd.

Sir, we will have the video first.

Okay. [Presentation]

To present for Power, I will turn you over now to Mr. Manny Rubio.

Thank you, Judd. Pardon my voice, I'm in a cold country and lost my voice 2 days ago. I'm with Liza Montelibano, who will help me answer some questions later on specifically finance questions if I'm really having difficulty answering the question because of my voice. So good afternoon, and welcome to Aboitiz Power's quarterly analyst briefing. The past months have been quite exciting for AboitizPower. Last September, we introduced to our 3,000 strong workforce a new grand scale -- a grand scale purpose of transforming energy for a better world and our redefined values, bringing more relevance and significance to our principles of integrity, teamwork, innovation, responsibility and service excellence. We did this realign our business strategies with the current industry landscape. I also want to share that AboitizPower was recognized as among the top 5 digital exemplars during the People Management Association of the Philippines Employee of the Year awards last October 14. This accomplishment is a testament to our drive to be an employer of choice, and we dedicate this into our greatest assets, our team members, one of the reasons we do what we do. AboitizPower continues to take the lead in environmental, social and governance standards and practices within the local energy industry. In fact, AboitizPower takes a top spot among local electric utility companies ranked in S&P Global Corporate Sustainability Assessment. We also secured a place in the FTSE4Good Index Series for 5 years now. And these recognitions enforce our momentum on this journey toward our sustainability goals and attest to commitment to achieving our purpose. More than just advancing the country's energy systems, we are driven to pursue a bigger and more holistic mission to help build a world where there is energy abundance and a prosperous and environmentally-sustainable society. Driven by our purpose and values, we are making great strides in power and progress across the country, and we recognize that we are fulfilling our crucial role in uplifting lives -- Filipino lives beyond our growth. And to discuss, I am glad to share that we have taken over management and operations of the GN Facilities, which include 1,338 megawatt GNPower Dinginin baseload plant in Mariveles, Bataan. While both units have yet to be fully accepted by January 2023, these have already been delivering much-needed energy to the grid during the commissioning period. Now that we've assumed their custody and control of these assets, we look forward to reinforcing our efforts to meet the country's increasing power requirements. Now allow me to share AboitizPower's third quarter results. We are happy to report the beneficial EBITDA for the third quarter was significantly higher by 29% compared to the same quarter last year due to the fresh contributions from GNPower Dinginin or GNPD Units 1 and 2, higher water inflows and gains from commodity hedges. It was also higher by 23% versus last quarter, mainly due to higher water inflows and gains from commodity hedges. As a result, our first 9 months beneficial EBITDA was higher by 9%, driven by fresh contributions from both units of GNPD, gains from commodity hedges, higher availability of GNPower Mariveles Energy Center or GMEC and higher water inflows. In the midst of pricing commodity prices and peso devaluation as a result of our good planning and forecasting, we are able to manage our fuel costs on our fixed price contracts and protect customers. We were also -- we were completely hedged on our fixed price contracts, which protected us in the midst of the rising coal prices. We have had a compensative hedging program for our commodity and currency as early as 2018. The higher performance was partially offset by the impact of Typhoon Odette and recognition of BI and LD claims last year. Without these one-off items, EBITDA would have been higher by 17%. The increase in EBITDA drove core income 17% higher year-on-year. Interest expense was lower due to Therma Luzon or TLI lower finance lease and effect of full payment of dollar loan of AP Parent. Taxes were also higher due to higher taxable income. So if we were to exclude the impact of Typhoon Odette, LD and BI claims recognized last year, core income would have been higher by 33%. The group recognized nonrecurring gains of PHP 1.2 billion last year due to appreciation of the U.S. dollar. As a result, AboitizPower's net income for the first 9 months was PHP 20 billion, 24% higher year-on-year. We have better note that we have almost achieved equivalent of last year's full year net income in the first 9 months of 2022. If we were to exclude the impact of Typhoon Odette, LD and BI claims recognized last year, net income for the first 9 months of 2022 would have been higher by 42% compared to the same period in 2021. Cash decreased by 33% due to bond maturity, loan repayment and higher working capital requirements for coal purchases. Investments and advances increased by 16%, mainly due to sharing equity earnings from GNPD and SNAP. As a result, our total assets increased by 6%. And with that, our net debt to equity decreased from 1.1x to 1.0. Capacity sales increased by 8% year-on-year due to fresh contributions from both units of GNPD and higher WESM dispatch of our portfolio. Unit 2 was selling to the spot market as originally planned in anticipation of high spot prices in the short to medium term. The total revenue increased by 78%, primarily due to fresh contributions from both units of GNPD, high availability of GMEC and higher effective bilateral contract quantities and spot prices and spot rates driven by indices. Our total energy sold was higher by 19% due to the same reasons mentioned in the previous slide. Our peso gross margin increased by 25% year-on-year mainly due to the previously mentioned drivers. Our purchased power volume increases as a result of our trading and arbitrage strategy. And as you can see from the quarterly performance charts on the right, our gross margins increased by 23% due to higher water inflows and higher indices. And as mentioned earlier, our purchase power increased as a result of our trading and arbitrage strategies. Spot selling prices increased by 34% to PHP 7.18 per kilowatt hour driven by higher demand and higher fuel costs of marginal plans. Note that this increase already takes into consideration intervals that were subjected to the secondary price caps. Our trading strategies also allowed us to take advantage of higher peak prices. BCQ selling prices increased by 39% to PHP 6.42 per kilowatt part, mainly due to higher indices. Average NEWC for the first 9 months of 2022 was $354 per metric ton versus $122 per metric ton in 2021. The recent movement in coal prices underscores the risks attached to fixed price contracts. The availability of our coal plants for the first 9 months of 2022 improved from 74% to 81%. And this was above the NERC benchmark overall availability also improved to 85% compared to 83% in the first 9 months of 2021. AboitizPower took over management and operations of GN Facilities, both GMEC and GNPD last September 1, 2022. For our distribution business group, beneficial power sales increased by 2% year-on-year with the exception of Visayan Electric as of third quarter of this year, all our franchise areas are at prepandemic levels already. Energy sales from residential customers decreased by 1% driven by lower consumption due to Typhoon Odette and cooler weather. On the other hand, commercial and industrial energy sales were higher by 4% due to recovery in demand. So allow us to highlight that what we have done for Cotabato Light in the past 2 years. Cotabato Light system loss has significantly declined from 6.84% last year to 5.34% this year as a result of improved efficiencies due to CapEx investments. With that, we are happy to report that all our systems losses were below the regulatory cap of 5.5%. Overall, average gross margins declined from PHP 1.62 per kilowatt hour to PHP 1.4 per kilowatt hour. This was due to timing difference of past 2 charges brought by higher coal prices from our generator supply. On WESM, average year-to-date load weighted average price was PHP 7.32 per kilowatt hour, 65% higher compared to the same period in 2021. Based on PEMC updates, this was due to thin supply in the market caused by increase in unplanned outages of baseload plants and increase in fuel costs driven by the ongoing Ukraine-Russia war. On the average, we expect higher WESM prices in this year 2022 compared to last year due to the depletion of Malampaya gas and upward impact of high fuel cost due to ongoing Russia-Ukraine war. So for better appreciation, we'll show you Luzon supply and demand situation in the next slide. The Luzon supply and demand situation continues to tighten. To meet existing critical market needs, we're optimizing our existing baseload facilities. And over the past few months, we have seen -- we have been seeing NGCP average alerts for the Luzon grid. As the economy recovers and opens once again, we expect that the tight situation will continue and become tighter still in the medium term. For the benefit of those who are unfamiliar with this chart, please closely look at the broken black line, which represents the intersection of annual peak demand and the grid's reserve supply requirements. So amidst this evolving supply and demand situation, which includes the impact of the DOE moratorium on building of new coal plants and the depletion of Malampaya gas fields, we expect our GNPD units to play a significant role in addressing supply gaps and meeting critical market needs. GNPD Units 1 and 2 are currently addressing the 2022 additional demand, and we expect that to continue up to the midterm. We have over 1,000 megawatts of disclosed projects so far. These have been delivering -- these have delivery commitments within the next 3 years. And with that, we are well on our way towards delivering 3,700 megawatts of additional RE capacity by 2030. So this is part of our decarbonization journey. So allow me to update you on some of the projects in the next few slides. The Cayanga, Solar project a 94-megawatt peak plant located in Barangay Cayanga, municipality of Bugallon, Pangasinan, construction activities for control building, transmission line, [ switch ] and PV module installation are ongoing. So overall project status, 81% completion with 0 loss time to injury incident. The project is expected to commercially operate by the first quarter of next year. Next slide, please. the Laoag Solar projects is 159 megawatts peak plant located in the Barangay Laoag municipality of Aguilar, Pangasinan. Clearing of roads going to substation was done while site grading of substation and [indiscernible] roads are ongoing. This will be our second solar venture in the province following the Cayanga Solar plant in the town of Bugallon is targeted for commercial operations by third quarter of 2023. SNAP-Magat's battery project began construction in August and is expected to commercially operate in the first quarter of 2024. And we recently signed a joint venture agreement with a global renewable energy company, Mainstream Renewable Power or Mainstream to build 90 megawatts onshore wind in Libmanan Camarines Sur. This joint venture marks our first foray into wind energy. The joint venture, which is subject to regulatory approvals, is being delivered to a 60% stake in the Libmanan onshore wind project with -- which Mainstream has been developing since 2017. And here is an update on APRI steam field operator initiative, the stream production enhancement campaign, which aims to drill in 12 new production wells with a minimum of 50 megawatts aggregated individual well capacity by 2023. As of October 22, all 9 target wells for MakBan have been drilled and are currently going into the system in addition to one in Tiwi. In Tiwi, 2 more new production wells are scheduled to be completed by the first quarter of 2023. Additionally, we signed an agreement with the Philippine Geothermal Production Company for the supply of brine that will fuel the new binary facility for another 15 megawatts. The project construction is targeted to be completed by end of 2023. The Maco battery project has acquired the necessary certifications and permits needed to start commercial operations this month and to serve as a model for future battery investments as well as hybrid renewable energy projects. A new purpose could not have come at a more opportune time as AboitizPower Group -- as Aboitiz Group The Great Transformation or GT2025 and north star will help ground our decisions moving forward. Since early this year, we have been talking about GT. But what does this exactly mean in line with the AP purpose? Transform, AboitizPower means decarbonizing our portfolio, putting digitalization and innovation at the forefront of our operations and growing beyond the core business. Among our initiatives, we are exploring hydrogen and ammonia coal burning in existing thermal plants to decarbonize our portfolio. This is on top of our investments to grow RE capacity to 4,600 megawatts by 2030. As I mentioned in our last briefing, we already have over 1,000 megawatts of projects in the pipeline. We are very much on our way to hitting our targets. Our digitalization innovation. We have democratized technology, making it accessible to all team members regardless of their line of work. So our on 1AP digital transformation journey or DigitalLeap, as we call it, we are transforming AboitizPower into an organization with a strong culture and belief in being the digital first and digital where it matters. And through this cost, we have made significant technological advancements to improve our generation assets and distribution, means availability, reliability and efficiency. Lastly, what does it mean to grow beyond the core? The energy transition has created a lot of uncertainties in the once predictable sector. So with those uncertainties come risks, but they also come with a slew of opportunities that we plan to optimize to win in an uncertain world. We will need -- and do it in an uncertain world, we need to develop a range of business options to cope, including the decentralization of power. We are keen on helping create ecosystems for smart and sustainable cities and communities down the road. And as we embark on a grand scale purpose of transforming energy for a better world, we will be steadfast empowering progress for the country and helping build prosperity for all. So to summarize my presentation, here are the key takeaways for you today. One, we have taken over management and operations of GNPD and GMEC last September 1, 2022. Second, we have almost achieved equivalent of our last year's full net income in the first 9 months of 2022. Third, overall availability has improved, allowing us to optimize our existing baseload facilities to meet critical market needs. Next, we are motivated by our new grand-scale purpose of Transforming Energy for a Better World. And lastly, in line with the group's Great Transformation, we will prioritize decarbonizing our portfolio, digitalization and innovation and growing beyond the core. Good afternoon to everyone. [Presentation]

And now to present for financial services, I will turn you over to Mr. Toto Hilado.

Thank you, Judd. Good afternoon, everyone. Thank you for joining us this afternoon. I'll be presenting the performance of UnionBank for the first 9 months of the year. Can we show the slides? Okay. Thank you. So for the first 9 months of the year, the bank made PHP 10.1 billion net income compared to PHP 10.7 billion last year. So the performance of the bank for this year was mainly driven by higher margins and higher earning assets and an increased share of consumer loans from 38% to 52%. The increase coming from the acquisition of the consumer loan portfolio of Citi. And then, of course, we saw a sustained increase in service fees from customer transactions for payment services and FX income. The third quarter 2022 net income came in at PHP 4 billion or 17% higher than the previous quarter, and we are confident that this rate of income can be sustained for the last quarter of this year. Our total assets crossed the PHP 1 trillion mark following successful integrations of the Citi consumer business, which brought in about PHP 95 billion in assets. Thank you. Next slide please. In terms of our net interest income, net interest income is higher by 26% on account of continued growth in our portfolio and solid increase in our CASA funding. Our net interest margin increased by 25 basis points due to higher yields in our portfolio from 5.62% to 6.07%, which offset the increase in funding, obviously increase from 1% to 1.20%. Total earning assets increased 20% year-on-year. Next slide please. In terms of our loan portfolio, our loan portfolio increased by 38%, primarily driven by the acquisition of the Citi portfolio last August 1, 2022. But without the Citi portfolio, our loan portfolio had a steep increase of about [ 40% ] . In terms of the breakdown, corporate loans increased by 5%, commercial loans increased by 9%, MSME loans by 13%, of course, credit cards from [ PHP 7.1 billion to PHP 69 billion ] because of the Citi portfolio. Our mortgage portfolio to is [ PHP 58 billion ] or an increase of 11%. Our digital loans increased from PHP 1.1 billion to PHP 3 billion. We also saw a substantial increase in our loan portfolio under Citi savings bank, which increased 23% to [ PHP 50.7 billion ]. So as of the first 9 months of the year, our total loan portfolio grew from PHP 304 billion to PHP 419 billion. Next slide please. In terms of total deposits, total deposits increased by 32%. What is notable is that our CASA growth was again strong at 31%. This allows a 25% increase in 2020 and a [ 28% ] increase in 2021. So if you compare our CASA levels prepandemic, we have actually doubled our CASA levels. Next slide please. In terms of noninterest income, if we compare it year-on-year, it's lower by 36% on account of trading gains -- substantial trading gains that we booked last year. However, even in the absence of trading gains this year, our core noninterest income increased by 90% coming from strong growth in fees and service charges. Next slide please. On our operating expenses, total operating expenses increased by 15%. But if we take out the one-offs and the integration of new businesses like the Citi portfolio and our digital bank, our operating expenses actually grew by 6%. Next slide please. In terms of our capital ratios, total CAR stood at 13.7%, our CET1 was at 11.9% versus the required CAR of 10% and CET1 of 8.5%. So we successfully acquired the consumer portfolio of Citi last August 1, and the transaction added PHP 98 million in assets, including PHP 65 billion in net loans, which includes primarily the cards and the personal loan portfolio. And a total of 1,500 employees, ex Citi employees joined us, including 100% of the senior management of Citi Consumer. And we saw strong customer engagement. Our attrition in terms of deposit accounts was less than 1% and 0 attrition for the credit card portfolio. And since then, we're still seeing record high increase in customer acquisition for the Citi portfolio. We are allowed to use the Citibank brand for another year, and we are under a 1-year TSA agreement with Citi, which means that we are still running on the Citi platform at least for 1 year. Next slide please. So let me summarize the performance of the bank. So recurring revenues from core business drove earnings for the first 9 months. Margins continued to improve due to higher-yielding assets and strong CASA growth, customer engagement and digital transaction are driving our fee and other income. In terms of our consumer loan portfolio, it is now 52% versus 38% in previous year, and we have started to accrue value from our Citi consumer portfolio starting August 2022. Thank you. [Presentation]

And now to present for Food, I will turn you over to Mr. Tristan Aboitiz.

All right. Thanks, Judd. Good afternoon, everybody, and thanks for taking time out of your Friday afternoon to be with us today. So I want to start with the Food Group's financial highlights for the first 9 months of 2022. The Food Group's revenue increased 26% year-on-year, ending at PHP 80 billion or approximately USD 1.5 billion with improvements in revenue contribution coming from both the agribusiness division which was up 19%; and our Food & Nutrition unit, which was up [ 32%. ] Likewise, EBITDA grew 11% to PHP 4.2 billion or USD 79 million driven by a 22% year-on-year increase in EBITDA contribution from our Agribusiness unit, which was tempered by a 24% decline in the contribution from our Food & Nutrition unit. Our EBITDA margin meanwhile posted a decrease year-to-date by 74 basis points, pulled down by 979 basis points and 562 basis point decline in our Farms and Flour division margins, respectively. Lastly, our Jan to September 2022 net income after tax went down drastically by about 85% year-on-year, finishing at PHP 260 million or approximately USD 5 million. The drop was due to the subdued performance in both the Agribusiness and Food & Nutrition units as we saw contractions of 108% and 85% in their net income after-tax contributions, respectively. The gains in the Agribusiness's EBITDA were offset by a series of provisions that were made to reflect the impact of adverse macroeconomic factors on our operations in Sri Lanka, Thailand and the Philippines. Pertaining to Sri Lanka, a provision was made to reflect an unrealized ForEx loss of PHP 485 million or approximately USD 9.3 million, which was brought about by the devaluation of the Sri Lankan rupee relative to the U.S. dollar, which decreased from [ LKR 203 ] to the dollar to [ LKR 365 ] to the dollar as of the end of May of this year. This ForEx loss is related to the payables of our Sri Lankan operation, GCFL. Given the magnitude of the devaluation of the Sri Lankan rupee and the likelihood of recovery of this investment, we also recorded a PHP 311 million or [ $6 ] million Sri Lankan goodwill impairment and made a loss provision on this investment of about PHP 151 million or USD 2.9 million. We also recognized a PHP 120 million or USD 2.3 million goodwill impairment for Gold Coin Specialties Thailand or GCST, which is one of our subsidiaries in Thailand. We felt it's best to ensure that we were reflecting the impact that the challenging conditions in the market have had on our biofeed business unit in a timely manner, and making this provision at this point in time does just that. Lastly, with the depreciation of the Philippine peso again relative to the U.S. dollar, our Agribusiness Philippine division and Food & Nutrition units incurred a PHP 254 million or USD 4.7 million loss related to foreign exchange. We will look to offset a portion of this as we continue to increase selling prices in the fourth quarter of this year. Excluding all of these extraordinary items, net income after tax for the first 9 months of 2022 would have been approximately PHP 1.7 billion, which is more or less at par with the same period last year. So focusing now on revenue. The full group's revenue grew 26% year-on-year to PHP 80 billion or USD 1.5 billion, which is attributable mainly to the increases in selling prices across all of our units. The Food & Nutrition business unit contributed PHP 15 billion or USD 274 million year-to-date, which is 32% higher year-on-year. Double-digit year-on-year revenue growth was seen across all divisions, which include our Flour, Farms and Trading divisions here in the Philippines. Our Farms division revenue increased 39% year-on-year on the back of higher selling prices and a 39% increase in volumes sold, which is mainly due to the successful recovery in our operations of Breeder Farm 1, which was hit by ASF in 2020. Our Trading division, meanwhile, continues to benefit from the impact of shortages in soybean meal and feed wheat in the Philippine market, which was at its peak in the last quarter of 2021 and first quarter of 2022. This enabled us to drive our sales volume up 6% year-on-year. And combined with a 36% jump in selling prices, revenue was 31% higher than what we saw for the same period in 2021. Our Flour division's revenue was 29% higher year-on-year, up to PHP 7.9 billion or USD 147 million, which were driven by price increases that were necessary to offset the sharp increase in the cost of wheat that has been seen throughout the first 9 months of the year. The cost of wheat remains elevated, mainly due to global supply shortages, which has been exacerbated by the ongoing conflict in Ukraine. Lastly, our regional Agribusiness unit delivered a total of PHP 60 billion or USD 1.1 billion in revenue year-to-date, which was 19% higher than the same period of last year. The increase of PHP 9.6 billion or USD 179 million was driven by increases in average selling prices of 24%. Again, similar to the Flour division, prices have -- we've needed to increase prices throughout the first 9 months of the year to offset the impact of rising raw material costs as well as the rising costs related to local and global freight. In terms of revenue contribution of the business units, 75% of total revenue came from our Agribusiness unit, 18% from our Food and Nutrition unit, and the balance of that was contributed through coal trading in our [ Abaca ] trading division in Singapore. In the first 9 months of 2021, the share of Agribusiness, Food & Nutrition and Abaca was 79% and 18% and 3%, respectively. Looking now at the group's EBITDA. The Food Group's EBITDA for the first 9 months of 2022 grew by 11% year-on-year to PHP 4.2 billion or USD 79 million due to a 22% improvement in the contribution coming from our Agribusiness unit, which cushioned the 24% year-on-year shortfall contributed by the Food & Nutrition unit. The 24% decrease year-on-year in the contribution of the Food & Nutrition unit to PHP 969 million or USD 18 million was attributable to the 49% decline in the EBITDA contribution coming from our Flour division. We saw a year-on-year drop in volume of 6% and in its margin per bag of 17%. Our Farms division's EBITDA was also lower by 5% year-on-year, pulled down by the decline in its margin of 20% due to rising feed costs. This was despite the significant increase in volumes sold by the division. Meanwhile, our regional Agribusiness unit saw a 22% increase in EBITDA contribution versus the same period as last year, which was the result of a 23% increase in gross profit per unit as we were able to catch up and slightly recover from some of the increases that we have been seeing coming from commodity prices. In terms of the EBITDA contribution of the various units for the first 9 months of the year, 71% of total EBITDA was derived from the Agribusiness unit, 23% was contributed by the Food & Nutrition unit and [ 6% ] came from abaca. This used to be 64%, 34% and 2%, respectively. Shifting now to the group's net income after tax. Overall, the Food Group's net income after tax of PHP 260 million or USD 5 million, fell 85% behind the same period of last year. The year-on-year lag in net income after tax was due to a drop in net income contribution from the Agribusiness and Food & Nutrition units by 108% and 85%, respectively. The 22% growth in the Agribusiness as EBITDA was unfortunately erased by the one-off that I described at the top of the presentation and finished at a negative PHP 78 million or negative USD 1.5 million. The Food & Nutrition's 24% drop in EBITDA was further pulled down by a higher consolidated FX loss of PHP 155 million or USD 2.9 million from its U.S. dollar-denominated payables for raw material purchases and an increase in taxes attributable to our Farms operation in 2022 due to a PHP 86 million or USD 1.7 million income tax holiday adjustment recorded last year. This resulted in the 85% reduction in the Food Nutrition's bottom line to PHP 103 million or USD 2 million. If we exclude the nonoperating write-offs I mentioned earlier from Sri Lanka and our Thailand operations as well as our FX losses in the Philippines, income contribution from the Food Group for the first 9 months of the year would have been PHP 1.7 billion or USD 33 million, which is more or less again at par with the same period of last year. Looking now at the strategic projects that are ongoing in 2022, the lease of our Kunming plant in the Yunnan area in China expires in April of 2024. So we are moving to a new location and constructing a 150,000 metric ton capacity feed mill with the potential to expand up to 270,000 metric tons to offset this. This will also have an additional room in our production line and mass conditioning line to allow us to enter into new segments of the livestock feed market in that part of the country. We have purchased the land for this China mill and are done with the soil and topography surveys. Engineering, procurement and construction management and value engineering engagements are currently ongoing, along with the design of the facility. Meanwhile, our Long An mill in Southern Vietnam will give us the ability to grow the livestock feed business in that region of the country. This mill will have a capacity of 200,000 metric tons and can potentially increase by another 100,000 metric tons if we choose to add a third line. This will supplement our [ Binh Duong ] and [ Dong Nai ] plants in Southern Vietnam, which are near maximum capacity at this point in time. The order for key equipment of this project will be placed soon as we are deciding between 2 final vendors and project land leveling has already begun. Moving forward, I will focus more on the first 2 projects you see on the table, are The Good Meat stores and Breeder Farm III. So the Good Meat is part of our Farms division under the Food & Nutrition unit in the Philippines. As we continue to grow our brand and channel of meat distribution, which we have called The Good Meat video, which you saw in the beginning of this presentation, we opened 2 new physical stores in Las Pinas and Visayas Avenue in Quezon City in October of 2022, each of which have a capacity of 2 metric tons per day per store. This addition has grown our -- The Good Meat stores from just 1 at the beginning of 2021, up to 5 at this point in time. The remaining branches, which are in Kapitolyo in Pasig as well as LIMA Land in Batangas, will be fully operational by the end of December of this year, bringing our total number of stores up to 7. Furthermore, The Good Meat will expand its supermarket presence to grow from 280 stores in 2021 to 290 stores in 2022. These are a combination of retail concessionaire stores and stores that carry our value-added Good Meat products. So while it doesn't see much in terms of the growth in numbers, we have been in the process of replacing nonperforming outlets with new ones that we believe will have more potential as the year goes on. We hope to see the impact of this moving forward in terms of sales per location. Again, this initiative will do 2 things for the Food Group, further develop our B2C channels and provide an expansion to the supply chain, which will ensure better distribution to all customers in the relevant target markets. With this, we hope to capture a larger percentage of margin that is available along the value chains and be able to unlock the value that is created by getting closer to the end consumers of our products. Lastly, an update on our third Breeder Farm in Nueva Ecija. The facility, which has a capacity of 2,500 sow level and broke ground in August 2021 was completed in October of 2022. We have loaded approximately 1,500 animals on to the site, and we'll load the balance before the end of the year. So by the end of 2022, we hope to have all 2,500 gilts on site. Market hubs produced from this facility are expected to be available in the market by the second quarter of 2023. It is our intention to continue to invest in our swine raising business, supporting the hog raising industry. And with our improved biosecurity protocols in place, we are confident we can expand our capacity amidst the spread of ASF in the country. Finally, I'd like to give you an update regarding our divestment of our Sri Lankan business unit. We signed an agreement to sell 100% of Gold Coin Feed Mills Lanka, or GCFL, to New Anthony's Farms Pvt. Ltd. one of the leading poultry farming and frozen chicken manufacturing companies in Sri Lanka. The sales purchase agreement was completed last month, October 2022. Moving forward, we will direct our strategy to focus on Southeast Asia and China, where our markets already have a strong presence. We believe that this divestment is a strategic move and will put the Food Group in a better position to build stronger positions in our existing markets. As we pursue our vision to become one of the leading regional integrated food and agribusiness companies in Asia Pacific, we will continue to invest in market expansion and business integration opportunities in the region. So to recap, here are the keypoints for the Food Group's 9 months 2022 financial and operating results and project milestones. Despite very challenging conditions around the region, the group registered revenue improvements due to increases in selling prices, which were designed to help us keep up with our high commodity cost base. Despite the commodity headwinds, the Food Group's EBITDA surpassed last year's performance. However, NIAT was dragged down by one-off expenses in our Agribusiness business unit and the ForEx losses incurred by our Philippine-based divisions. We would also like to highlight the completion of Breeder Farm III as this is a step forward in our strategy to build a strong integrated mill-to-meal business in the Philippines. And lastly, our divestment in Sri Lanka, which enhances our ability to focus on Southeast Asia and China, where the Food Group currently holds strong market shares. So that's all for the Food Group. Thank you. Back to you, Judd. [Presentation]

Now to present for Land, I will turn you over to Mr. Dave Rafael.

Okay. Good afternoon, everyone. So okay. So key financial metrics for the first 9 months of 2022 show that AboitizLand is on track versus budget and has exceeded last year's performance for the same period. AboitizLand contributed total revenues amounting to PHP 3.8 billion as of the third quarter, a 30% increase from the same period in the previous year. This is primarily due to the residential businesses ramp-up construction activities and strong sales performance, which I will be discussing in more detail. Consolidated EBITDA grew by 23% at PHP 958 million and is expected to meet full year target. Next slide please. The residential and industrial business units contributed 57% and 39% of the total revenue, respectively. The revenue growth for the industrial and commercial businesses will be covered in the economic estates of Aboitiz Infra later on. For the residential business, the positive revenue variance is due to increased house construction of revenue-generating units and significant site development completion in a number of projects. Strong sales performance across all projects, coupled with spot cash sales for our high-end projects, also contributed to residential revenue growth. While 4 features caused a slight dip in our net sales performance compared to last year, net book sales is expected to modestly exceed our full year target because of bulk sales from some of our high-end projects as well as our improved sales booking efficiency. Next slide please. AboitizLand and its projects have been recognized by some of the most prestigious award given bodies this year. At Lamudi's The Outlook, Philippines Real Estate Awards last September, AboitizLand bagged the Developer of the Year Award for Visayas and Mindanao; Seafront Residences in San Juan, Batangas won the Best Premium House of the Year in Luzon; and for the second year in a row, the Best Affordable Housing Development in this mean was awarded to Amoa in Compostela Cebu. In addition, winning these awards, AboitizLand was also highly commended for, number one, seller support as we continue to be pioneers of the contactless home buying service; number two, Pristina North Residences as the Best Premium House in the Visayas and Mindanao; and number three, The Village at Lipa as the Best Master-Planned Community. AboitizLand was also recognized at the PropertyGuru Philippines Property Awards last October, Amoa once again won as the Best Housing Development in Visayas. Seafront Villas was highly commended as the Best Waterfront Condo Development in the Philippines. While Ajoya Cabanatuan was also highly commended as the best housing development in Luzon. With this recent wave of recognition from the real estate industry, AboitizLand will continue its journey to pioneer new approaches and innovate ways to bring Filipino families home. Next slide please. Following the robust market reception of the Sierra and Brook villages, AboitizLand recently launched Meadow Village last month, which is the third and most premium enclave of the villages at Lipa. It is a 12-hectare premium residential lot development in Lipa, Batangas, shaping up to be the next big thing in the south for its outstanding brand value, community characteristics that encourage multifaceted living and its desirable location as part of the Lima estate. Next slide please. Moving on to more operational updates. In construction, our investments in precast construction technology are starting to show positive results in transforming our ability to build and deliver homes faster and better. To date, there are over 100 units being constructed by our partners, Sumitomo, Smart Masonry and Connovate in the villages at Lipa and [indiscernible] . This is a major milestone for it's innovating the way we build distinctive and high-quality homes that are built for the future. In collections, the continued rise in interest rates charged by banks for loans has been a big challenge for Vecinos in securing takeout loans and home loan financing. To address this, we continue to expand our network of accredited banks and expand our tie-ups with online mortgages, mortgage brokers like Nook, Matchmo and Uwi to provide Vecinos a wider range of options in obtaining affordable financing. Next slide please. AboitizLand also continues to innovate every step of the customer journey. Our Vecino app will be used as our competitive advantage in international deployments as it allows us to differentiate ourselves by providing OFWs a reliable tool of checking their investment. We have also started to use a new customer service platform, which offers omnichannel support, self-service tools, performance management and customer satisfaction feedback tools to innovate the way we deliver service to our Vecinos. We are also enhancing the customer experience through digitization of property management services that simplifies the sourcing of services, registration of visitors, reporting issues, paying dues and bills, exchange of goods and selling and leasing out of the units. Last slide, please. To summarize, here are our key takeaways. AboitizLand met most of the key operational and financial metrics for the first 9 months of the year in spite of the ongoing macroeconomic volatility and uncertainty and is on track to meet full-year targets. Milestones are on track with project launches and initiatives in construction, collection, sales, customer service and property management. Driven by our thrust for operational excellence, strategic partnerships, differentiated customer service and digital transformation, AboitizLand continues to gain industry recognition winning several awards, including Developer of the Year in Visayan and Mindanao at Lamudi's Philippine Real Estate Awards. We also recognize the challenges in the current business environment. Increasing [Technical Difficulty] in the spreads, we'll make acquiring a new property more difficult to our customers. In response to this, AboitizLand continues to expand its network of accredited banks and tie up with online mortgage brokers to provide our Vecinos a wider range of options in obtaining more affordable financing. With higher construction and fuel costs resulting from global disruptions affecting the supply chain, we were able to manage costs by entering into strategic contracts that allowed us to lock in prices early in the year. As we remain bullish in the Philippine property market, we are slated to have our international sales deployments in order to capture the residential real estate demand from our overseas Filipino buyers with the depreciation of the Philippine peso. We are likewise on track to ramp up our sales initiatives, utilizing digital channels and data-driven methodologies that will innovate our leads generation and payment scheme offerings. AboitizLand believes that the overall business economy -- the overall business environment in the Philippines moving forward, will continue to remain challenging. However, we are maintaining an optimistic outlook towards the future of the Philippine property market as we develop our new direction strategy based on improving consumer confidence, our organizational capabilities and attractiveness of our product offerings. Back to you, Judd. Thank you. [Presentation]

Now to present for infrastructure, I will turn you over to Ms. Cosette Canilao.

Thanks, Judd. Good afternoon, everyone, and I'm excited to share with you the performance highlights of Aboitiz InfraCapital for the first 9 months of this year. So as what my fellow presenters mentioned a while ago, 2022 has been a challenging year thus far with fuel price hike and the rising commodity costs as well as the onslaught of natural disasters. But despite all these challenges, AIC stayed on course and was able to achieve significant milestones, posting a 7.4x increase in EBITDA over the same period last year, Aboitiz InfraCapital continued to make progress and is poised to finish the year strong. We have been busy further building and strengthening our platforms in each of our verticals, namely economic estates, water, digital infrastructure and transport and mobility. Let me go through the highlights of which quickly, starting with the landmark deal we entered into with Megawide Construction Corporation and GMR Airports last September for the acquisition of shares in the GMR-Megawide Cebu Airport Corporation, which is a developer and operator of the Mactan Cebu International Airport. We are also in continuous discussions with the government to operate the Bohol-Panglao, Laguindingan and Bicol International Airports, where we were earlier granted with original proponent status. As the first industrial park to receive the pilot BERDE District Certification with a 5-star rating, our Lima Estate continues to reach new heights. It has won several accolades at the recently-held PropertyGuru Philippines awards vesting some of the most recognizable organizations in infrastructure and real estate. Expansion projects for our Lima Estates are all on track. In terms of digital infrastructure, AIC entered into a partnership with EdgeConnex, the pioneer in global hyperlocal to hyperscale data center solutions in the United States for the development of hyperscale data centers across the Philippines. This move to diversify into data centers officially marks our second pillar in the digital infrastructure space following the establishment of Unity digital infrastructure last year. Speaking of Unity, it now has more than 100 sites, macro towers and 500 active sites in various phases of development. The 500 active sites includes 400 poles for small cells in key cities nationwide. Lastly, Apo Agua is committed to have the bulk water supply project operational by the first quarter of next year as it has currently ramped up construction work that was delayed by the COVID pandemic. Once completed, AIC will supply 300 million liters of safe, clean and sustainable water to the Davao City Water District, benefiting over 1 million Davaoians. Meanwhile, our Estates Water is also stepping up its effort to address the current non-revenue water challenges of MEZ 2 and West Cebu Estate. As of September this year, we were able to reduce NRW of MEZ 2 and WCE from 13% to 6% and 10% to 7%, respectively. Our CapEx for the first 3 quarters of 2022 is up 74% from the same period last year. This was driven by our economic estates, which had a CapEx of PHP 1.87 billion for its continued expansion and Apo Agua at PHP 1.6 billion. Our digital infrastructure CapEx also rose to PHP 844 million as tower development continues to accelerate. AIC's consolidated EBITDA surged to more than 7x or 715% compared to the previous year. The significant jump is mainly driven by economic estates with a huge EBITDA contribution of PHP 2.9 billion, 3x higher versus last year and the onetime gain from the sale of the small cell sites business to Unity, which amounted to PHP 390 million. Now moving on to the more detailed business updates. As you may all very well know by now, we have signed the agreement to jointly operate and maintain Mactan-Cebu International Airport at Megawide, and the GMR Group. Following the signing of this deal, AIC as a partner will be in-charge of jointly managing and running Mactan International Airport with GMR and Megawide, after all the regulatory and financial prerequisites are completed, hopefully within this quarter. As of September, AIC acquired 33.5% (sic) [ 33.33% ] of [ MCIA ] and its affiliates, with the remaining 66.67% in Exchangeable Notes to be redeemed in 2024. With our entry to MCIA operations, we commit to enhancing the travelers' experience at this regional gateway and strive to further improve its operational excellence and efficiency. As a champion of innovation and technology, we are excited to explore the use of data science and artificial intelligence to tack up MCIA operations and transform it into a smart and winner airport. This recent development will further solidify our roots in Cebu, leveraging on our strong local presence through MEZ 2 Estate and West Cebu estate as well as the AboitizPower's Visayan Electric Company. With our current proposals for other regional airports such as Laguindingan, Bohol and Bicol, MCIA will serve as the springboard in achieving our aspiration of building the first Philippines airport platform focused on providing only the best and most holistic airport experience to Filipinos and international visitors. As the global nation continues to open its borders, we are enthusiastic about our prospects. We now have a critical path -- part to play in hastening the post-pandemic recovery of our local and regional economies. Marking another significant milestone in AIC's young history is our partnership with EdgeConnex or ECX, a leader in global hyperlocal to hyperscale data center solutions based here in the U.S. By creating a data center platform to house cloud service providers IT equipment, the joint venture hopes to address the growing demand in the Philippines and improve their ability to serve the local market. Our data centers will provide a space and cooling and power needed to maintain the data servers and storage equipment. These servers and storage are used by cloud service providers to enable streaming services, e-commerce services, online transactions of banks and telecoms and connectivity for social media platforms. The first 2 data centers will be focused in the Metro Manila area with a connectivity facility adjacent to the local Internet exchange and a secondary hyperscale campus facility to be located into Greater Manila area. The partnership will look to tap AIC's land bank of around 1,400 hectares of prime real -- industrial real estate and AboitizPower diversified renewable energy capacity. The Philippines has the fastest-growing digital economy in Southeast Asia, and data centers are the driving force behind this. However, the country remains to be an underserved market with a growing demand for data. the market size, favorable demographics and a proliferation of subsea cables make the Philippines an ideal destination for data center investments. Consequently, this new partnership will fulfill the needs of the local market while strengthening the digital infrastructure ecosystem of the Philippines. Our platform also intends to aid the government's initiative to make the Philippines a digital nation. The C in Connect and Component of DICT's chip structure is supported by our present initiatives. We also want to develop new strategies for assisting the chip frameworks of remaining components. AIC's involvement in this evolving digital infrastructure ecosystem will rise dramatically as a result of this joint venture. Moreover, our company's focus on enhancing the nation's digital capabilities fit well with our ambitions to advance through a great transformation and establish ourselves as the first techglomerate in the country. Capitalizing on the anticipated economic expansion outside Metro Manila, AIC is determined to increase its presence in Batangas, Cebu and other key cities across the country. We are committed to developing and transforming our economic estates into the nation's future smart and sustainable cities by incorporating digital innovation and ESG initiatives. This would, in turn, attract more local and foreign investors, create job opportunities and boost local economic activities. A clear testament to this is Lima Estate receiving the pilot BERDE certification with a 5-star rating, the highest rating of the Philippine Green Building Council. Lima estates also reaped major awards from the 10th PropertyGuru Philippine awards, including Best Green Development, Best Central Business District, Best Industrial Development, Best Industrial Developer and a Special Recognition for Sustainable Design and Construction. Additionally, for -- we broke ground for the third phase of commercial lots within Lima Central Business District last August. Planning for West Cebu Estates on CBD is also in progress and the first phase of the West Cebu Estate is scheduled to begin construction by 2023. The first 3 quarters of '22 have been extremely productive for us [Technical Difficulty] at AIC, and we are looking forward to adding some more to [Technical Difficulty] [ deliveries ] of capital is optimistic that we will be able to carry out our plans and activities by end of this year. Each sector is on course to meeting its goals with a considerable completion of the Lima expansion Phase 1 and commercial lots, 50% completion of the Lima Phase 2 and West Cebu Estate expansion. Lima Water is about to finish its Smart Water Network Project, while Apo Agua is ready to start its commercial operation in the mid first quarter of next year. Unity is on schedule to complete additional small cell sites and macro towers to support the country's need for enhanced connectivity. Lastly, AIC will support the operations of MCIA by year-end. In closing, we welcome the current administration's openness and willingness to work together for local and national infrastructure development. We look forward to taking part in this renewed interest for public-private partnerships, so we could move forward with our [Technical Difficulty] proposal with original proposal. Thank you. Judd? [Presentation]

And now to present for Cement, I will turn you over to Mr. Roman Menz.

Thank you,. Good afternoon, everyone. Very happy to be with you today and walk you through the year-to-date performance for Republic Cement. After many years, I would say, of Cement growth we have seen in 2022, so far, a contraction of the market year-to-date average is the same period of last year, mainly impacted by the unprecedented inflationary environment, not just in our industry but across the economy and especially around some of the construction materials like steel and others. We see also some impact of the election year. The election years typically are lower in our industry having some impact because of preelection [ bans ] and postelection transition, I would say, in the administration, which is actually very committed to infrastructure building in the country, which communicated 5% to 6% of GDP on infrastructure. However, we have seen a softening across the segments be it in residential, be it in nonresidential or also infrastructure in 2022. Looking forward, I think coming out of this is the strong recovery going back to a growth in our industry as we speak. Republic is committed to be close to our customers throughout the country with our high product -- high-quality products, while also improving our efficiencies in the company. We have been supplying and involved in some key projects across the country. We are a key supplier in the infrastructure phase or infrastructure space rather in some key projects like the Metro Manila subway. We, like some of my colleagues, have seen quite a lot of headwinds in input costs in our business in 2022 with unprecedented pressures on energy prices in terms of production costs. We have plans in place to mitigate some of those production costs through operational initiatives, but some key cost initiatives. Among those also trying to replace some of the traditional fuels with what we call alternative fuel, which is basically recovered by our [indiscernible] branch. Throughout the country, we have places of collection and processing of residual base, which we use and we see record levels year-to-date in the replacement of traditional fuels in our operations, helping not only the communities and industrial customers but also the Republic Cement to become more competitive. We applaud the recently adopted EPR law, the extended producer responsibility law, which regulates starting 2023 the collection of waste and our industry and especially the Republic Cement is tuned to actually be a solution or one of the key solutions. In this space, we have invested and we keep investing this year and next year also into that. We've also finalized our debottlenecking project, which gives us additional capacity. We have reached almost 10 million ton of capacity as we speak with the recently completed milling projects, cement mill projects in our [indiscernible] Bulacan plant. We have also -- we have continued to be committed to our sustainability agenda. At the forefront of this is obviously the responsible mining. We have been recognized in the past and hopefully also in the future will be recognized for the way we mine. Our core is we have been -- I think we have a world-class operation, and we are very much the benchmark in the Philippines when it comes to responsible mining. We also pushed the envelope on environmental protection and community engagement across our sites. So I think, we continue to support the government go local and by local programs as one of the industry leaders in the industry. And these are products which will serve a safer, greener and stronger republic as we go ahead. Thank you very much. Back to you, Judd.

Thank you, Roman. And now to present AEV's financials, I will turn you over to Mr. Dmi Lozano.

Good afternoon, ladies and gentlemen. I'd like to start off with a quick snapshot of our key performance highlights. AEV recorded [indiscernible] almost 40% higher year-on-year. This was due to growth seen across all of our business units. In particular, our power and food businesses showed the biggest growth in revenues. Power had higher revenues due to the higher effective BCQ and spot rates driven by fuel indices and higher availability of GNPower Mariveles. Food on the other hand, had higher revenues due to the increase in selling prices across all divisions, which was really mainly to recover on the higher input costs that the food businesses were faced with so far this year. This as a result of the strong revenues are consolidated -- next slide please. Yes. So as a result of our strong revenues, our consolidated EBITDA is also up by 9%. But it's worth looking at it now on a normalized or beneficial basis. When we look at it on a beneficial basis, our first 9 months beneficial EBITDA was 17% lower compared to last year, but this was mainly due to the decrease from power due to reduction in our ownership from 77% to 52%. There was a few other factors, including lower cement volume and higher input costs in real estate because of increase in house construction activity that actually helped offset that, right? So -- but as part of its transformation strategy, and as I mentioned earlier, recall that AEV's ownership and therefore, share in earnings in AP had declined from 77% to 52% at the end of 2021 as a result of the strategic partnership with JERA. If we retain the same ownership as last year and remove the extraordinary trading gains that came from UnionBank, normalized beneficial EBITDA for the group would have been higher by 19%. And that momentum that we're seeing continues in the third quarter. Our third quarter performance versus the second quarter of this year was 10% higher, mainly due to improved performance across almost all of our business units, but mainly driven by power, the bank and land as explained by our CEOs earlier in their talks. Moving on to core net income. Taxes and others were lower than normal in the previous year as a result of the one of the three tax adjustments. So that was already normalized this year. The noncontrolling interest has also jumped as a result of the sale to JERA, and that's why it went from a little over PHP 5 billion to close to PHP 11 billion in controlling interest in 2022. With that, our core net income for the first 9 months was PHP 16 billion, 17% lower year-on-year. However, if we retain the same ownership again that we had of AP and remove UBP's extraordinary trading gains, our normalized core net income would have been higher by 35%. Now going to consolidated net income. The group recognized nonrecurring gains of PHP 5 billion, mainly due to the revaluation of our U.S. dollar cash and liquid financial instruments. As a result, net income for the first 9 months of 2022 was PHP 21 billion, 9% compared to last year's consolidated net income. This translates to an EPS of PHP 3.79 per share. Moving on to the balance sheet. On a consolidated level, cash and cash equivalents decreased by 30% and to fund AEV's growth lands in 2022, which included infrastructure projects in our new endeavors, digitization efforts in our bank and the Citi acquisition as well as regular debt service payments of the operating business units. On a Parent level, AEV shifted from a net cash position of PHP 18 billion to a net debt position of PHP 3 billion as a result of UBPs [indiscernible] offering earlier this year. Meanwhile, on a consolidated level, our net debt-to-equity ratio remained well within our parameters of 1.5x. On a parent level, our interest coverage ratio significantly improved, and you can see that in the figures there. So just to summarize here, the key takeaways that I'd like you all to go with it. First, despite sale of AP and headwinds in our other business units, our NIAT, our consolidated NIAT was up due to the performance of our power business and the group's ForEx gains. Second, a solid balance sheet that we have allows us to seize opportunities as they arise in the market, and we've seen a few of these earlier this year. As a result, so far, we continue to invest in new projects, such as our recent wind joint venture, our airport acquisition, the new data -- the new data center joint venture and quite a lot of new projects that will help diversify -- further diversify our portfolio. And finally, our great transformation into the country's first Philippine techglomerate has ramped up in scale and speed as evidenced by the recent Singapore launch of Aboitiz data innovation, where we showcased how data science and artificial intelligence can help accelerate change in the region's financial services [Technical Difficulty] and even smart cities, industries towards a data-driven future that we will be seeing in the not-so-distant future. We have much to show for not just in the latest financial figures, but more importantly, in the significant cultural transformation currently taking place amongst our team members and the way we work together. Thank you. That concludes our presentations. Back to you, Judd.

Thank you, Dmi. Before we move on to our Q&A, we would like to request our audience to complete a poll that will pop out on your screen right now. [Voting]

Thank you for answering our poll.

Now on to our Q&A. We have received advanced questions. We will take them up now. If we have time, we will address questions raised live on the platform. So our first question for today is directed to AEV, so we will ask Dmi to respond to this. Do you see higher interest rates globally as a challenge for your overall business?

Well, I think you have to look at it in a couple of ways, right, if you look at our existing interests, our existing loans and bonds, the good news is we have fairly long-term facilities already that were in place for our large project finance. So that's locked in the rates. In fact, I'm pretty sure that almost all of our loans are fixed rate and not floating. So in a way, we kind of have hedged at least from our existing debt portfolio. So -- but I think, well this will hurt us more to be a bigger challenges for new businesses, new investments and new CapEx because these projects will already be subjected to the higher interest rates. And also at the same time, we'll probably push our -- the returns that we need on these projects to be higher to accommodate this rising interest rate cost. So I think that's where we will see the challenge. If we make us to be more picky on the projects that we're looking for that we ensure that we have a high enough return to cover the new and rising interest rate environment.

The second question is also for AEV. So Dmi, will be addressed to you. Is a strong U.S. dollar positive or negative for the overall business?

I think one of the nice things about having a diverse portfolio of assets is usually things like this, will give you both positive and negative, hopefully more positive than negative. But in general, higher or more expensive U.S. dollar does pose problems or challenges for us. We have a lot of businesses that import raw material and other input costs for their businesses. So for food, we import wheat and other soybean meal, et cetera. For power, we import coal; cement also, we import coal as well, right? So for the Philippines in general and us in particular, we do have some industries that will get impacted because of our reliance on imports. The good news is for some of these, at least we have covered and you heard Manny talking about hedging our coal purchases. And that includes not just the coal price, but also hedging the ForEx requirements as well. So we try to manage our exposure as much as we can. But in the long run, especially if the peso is weak for an extended period of time, it starts to impact our input costs. So the goal is if we can try to pass this also on eventually with higher prices. But in this year, in particular, if there's a positive, after we sold 25% of AP to JERA, we did have quite a significant amount of U.S. dollar cash and liquid financial instruments in our books, and I mentioned that earlier. So we have quite a strong gain from holding this dollar position. So AEV itself is net dollar -- low on the dollar, and we have benefited from the strong performance of the U.S. dollar versus the peso. So I guess for -- it's a balance of both. And hopefully, though, we start to see more stability and more clearer visibility of where the peso is going because at the end of the day, the goal really is to ensure that we plan properly, right? So if we have a belief where the peso is going, we have a belief on where interest rates are going, then it gives us a better chance of making the right decisions when we look at new investments.

Thank you for that, Dmi. Our next question is for our Power business. So this will be addressed to EVR.

Judd, we will pass those questions. I'll ask Liza to answer them. My voice...

His voice is fading.

Okay. So for this next question, how much energy was produced and sold and was earned, including year-on-year change by the hydro plants in 3Q 2022 and 9 months 2022? So...

Okay. So comparing third quarter 2022 against the same period last year, energy sold and EBITDA increased by 17% and 34%, respectively. If we compare 9 months 2022 against the same period last year, energy sold and EBITDA increased by 17% and 9%, respectively. The increase in energy sold and EBITDA is attributable to higher water inflows and net BCQ margins.

Thank you. Our next question is also for Power. Can you expound on the gains from commodity hedges and how much were these gains both in 3Q and 9 months 2022?

So we employed hedges to lock in our fuel costs, and this insulated us from the volatility of the commodity prices. So as a result of good planning and forecasting, we were able to manage our fuel costs and we were able to honor all of our fixed price contracts. So a small more in how we use it. So let's say, if the new assumption for the coal at the time that the contract was locked with the customer was 100, then AP would have hedged at 100 for the duration of that entire contract. So given the scenario, AP was buying the physical coal today at 300 or 400, AP gets the hedge [ being in the index ] in the hedge price effectively bringing back the fuel costs back to 100. So the third quarter and 9-month gain were PHP 4.6 billion for the third quarter and PHP 11.5 billion for the 9 months.

Thank you for that, Liza. Our next question is also for power. How much the GNPD units wanted to contribute to earnings in 3Q 2022 and 9 months 2022?

So GNPD's net income contribution for the third quarter was PHP 2.3 billion beneficial. Total 9 months 2022 net income contribution was PHP 5.6 billion beneficial.