Denise Nicole Cuartero

BS- ENTREPRENEURSHIP
Block 3-1

Aboitiz and Company

Aboitiz & Company (ACO) is the private holding company of the Aboitiz family founded by Paulino
Aboitiz in the late 1800s. It began as an abaca trading and general merchandise business in Ormoc,
Leyte and ventured into inter-island shipping to transport its goods across the Visayas.
When Don Ramon Aboitiz, Paulino’s second son, took over management of the company, he
established a strong foundation of growth and expansion that transformed the young shipping and
trading firm into a highly diversified group of companies. For 46 years, he led the organization guided
by such principles of honor, reputation, trust, and integrity.
In 1994, to fund emerging growth opportunities, ACO listed Aboitiz Equity Ventures on the Philippine
Stock Exchange as the holding company for its power, banking, food and transport businesses.
Today, ACO’s other shareholdings in privately held companies are in construction and shipbuilding.

Metaphil (or the Aboitiz Construction Group) specializes in project management and projects
involving large civil works, industrial piping works, electro-mechanical works, and steel fabrication.

The Aboitiz Way: Our Core Values

For over a hundred years of doing business, we in the Aboitiz Group have nurtured and strengthened
our core values and beliefs that guide us to be the best at what we do, and embolden us to uphold
our mission of creating long-term value for all our stakeholders.
 INTEGRITY
We believe in integrity.
We deliver on what we promise,
practice fair processes,
are accountable for our actions and their consequences.
TEAMWORK
We believe in teamwork.
We apply a multi-disciplinary approach to achieve our business goals.
We work independently while promoting cooperation and mutual respect.
INNOVATION
We believe in innovation.
We constantly look for better ways to provide efficient systems,
quality service and products.
RESPONSIBILITY
We believe in responsibility.
We adhere to good corporate governance,
advocate organizational and environmental sustainability,
and care for all our stakeholders.

COMPANIES UNDER ABOITIZ:

ABOITIZ EQUITY VENTURES
AEV is the public holding company of the Aboitiz Group with major investments in power, banking and
financial services, food, infrastructure, and land. Staying focused on its mission to create long-term value
for all its stakeholders, AEV is recognized as one of the best-managed companies in the Philippines and
in the region.

a.) POWER
Aboitiz Power Corporation, a vertically integrated company engaged in power generation,
distribution, and energy supply, is one of the largest private power producers in the
Philippines. The Generation Group harnesses power from a right-mix portfolio of renewable
(hydro, geothermal and solar) and non-renewable (coal and oil) sources through its 46
generation facilities across the country. The company’s hydro group is the pioneering
industry leader in the development of small to medium hydroelectric plants over the past 39
years. With over 70 years of experience in the power distribution sector, Aboitiz Power’s
Distribution Group is currently composed of 8 utilities, including the nation’s second and
third largest, which supply electricity to high-growth areas in Central Luzon, Visayas, and
Mindanao. The Group continues to implement innovative and efficient ways to serve the
growing needs of over 917,000 customers.

b.) BANKING AND FINANCIAL SERVICES

1. Union Bank of the Philippines (UnionBank) is a publicly listed universal bank that
distinguishes itself through superior technology, unique branch sales and service
culture, and centralized backroom operations. It is consistently recognized as one
of Asia’s leading companies in banking and finance, ranking among the country’s
top 10 universal banks in terms of key performance ratios in profitability,
liquidity, solvency, and efficiency.

2. City Savings Bank is the thrift bank subsidiary of UnionBank and a member of the
Aboitiz Group. The whole organization is geared towards making the financing
experience for the public-school teachers easy and convenient, ensuring high
touch at any level of customer interaction. It now has 100 branches nationwide.

3. PETNET is the country’s largest Western Union agent network with its 2,200-
branch network composed of company-owned and sub-agent locations. In
addition, it is geared towards providing complementary products such as foreign
exchange, bills payment, airline ticketing, cellphone loads, and micro-insurance.
 c.) FOOD
Pilmico Foods Corporation, established in 1962, is among the top 3 flour milling companies
in the Philippines. A leader in operating efficiency, it manufactures flour and wheat by-
products. Pilmico has also been a strong player in animal feeds and swine production since
establishing these businesses in the late 1990s. With its commitment to quality products
and processes, the company ensures its market competitiveness by increasing customer
satisfaction while remaining a low-cost producer. In 2014, the Pilmico Group acquired Vinh
Hoan Feeds, an aqua feeds plant in Vietnam, marking the group’s entry into the
international market. Pilmico is currently building capacities and capabilities to sustain
profitability and grow its businesses both in the Philippines and in the ASEAN region.

d.) INFRASTRUCTURE
Aboitiz InfraCapital, Inc. (AIC) is the fifth business leg that undertakes all infrastructure and
infrastructure-related investments of the Aboitiz Group. AIC is poised to take advantage of
the growth momentum and the government’s commitment to bolster further advancement,
by building the right infrastructure that will advance business and communities. The
Republic Cement Group, AEV’s partnership with CRH plc, is the country’s second-largest
local cement manufacturing and distribution company. It operates six cement facilities
across Luzon, Visayas, and Mindanao producing over 25% of the cement requirements of
the country. APO Agua Infrastructura, Inc. is a joint venture between AEV and J.V. Angeles
Construction Corporation. APO Agua signed an agreement with the Davao City Water
District (DCWD) to build one of the country’s largest private bulk water supply project with a
capacity of at least 300 million liters per day of potable water sourced from the Tamugan to
benefit Davao City’s one million residents.

e.) LAND
Aboitiz Land, Inc. is engaged in the design and development of distinct communities for
residential, industrial, and commercial use. After over two decades in operation, it is today
one of the country’s most trusted companies in real estate development. It continues to
strengthen its position by expanding geographically through land banking in key growth
areas across the country while continuously delivering dream homes and commercial
spaces. In 2014, Cebu’s homegrown real estate developer kicked-off its national operation
by acquiring LiMA Land, developer of the 590-hectare LiMA Technological Center in
Batangas. Today, the Land Group is geared towards growth in all of its business units, aiming
to become a stronger player in the national real estate scene by curating communities that
ensure better lives.

ABOITIZ CONSTRUCTION
Aboitiz Construction (formerly Metaphil) specializes in project management and projects involving large
civil works, industrial piping works, electro-mechanical works, and steel fabrication.

TSUNEISHI
TSUNEISHI HEAVY INDUSTRIES (CEBU) Inc. is a joint venture between Japan-based shipbuilder Tsuneishi
Group (head office: Fukuyama, Hiroshima, Japan) and the Aboitiz Group. TSUNEISHI HEAVY INDUSTRIES
(CEBU), group company of TSUNEISHI SHIPBUILDING Co., Ltd., is celebrating its 20th year in operation in
Balamban, Cebu, Philippines.
BOARD OF DIRECTORS

The Aboitiz Group has always taken pride in leadership excellence across five smooth transitions in top
management while retaining the simple and intrapreneurial approach that fueled the group’s expansion.
This has played an integral part in the continuity of policies and execution of our strategic business plans
with every turn of the tide. Today, as a new generation of leaders of our business takes shape, we
consider ourselves as a family-led enterprise that will continue to produce leaders from within our
ranks, a leadership bench that is capable of stimulating healthy change and progress in the
organization.. Below are the Members of the Board for 2020-2021:

THE STORY OF ABOITIZ:

BEGINNING

Aboitiz & Co. traces its beginnings to Spaniard Paulino Aboitiz who, after his marriage to Emilia Yrastoza,
started trading in abaca fiber or hemp, aside from trading in hemp; Paulino operated a general
merchandise business with Angel Moraza, who was married to Emilia’s younger sister; Guadalupe.
Together with his brother-in-law, Angel, who was based in Baybay; Paulino also operated a general
merchandise store. At the turn of the century, Paulino, Emilia and their 10 children went to Cebu when
the Spanish government collapsed. Paulino entered into a partnership with abaca dealer Jose
Muertegui, who was based in Palompon, naming their business Muertegui y Aboitiz; when the volume
of business increased, the partnership bought the ship "Picket" in 1907 to transport their abaca. During
that time, combining abaca and shipping interests was common. The family business grew under the
management of the second son, 22-year-old Ramon who assumed his father’s position as a partner in
the firm. Ramon and elder brother Guillermo also formed a partnership, G. y R. Aboitiz that sold general
merchandise in areas not covered by Muertegui y Aboitiz. In 1916, the Muertegui y Aboitiz partnership
was dissolved after the Aboitizes paid P95,000 for Muertegui’s share.

NEW PARTNERSHIP

The family formed a new partnership called Viude e Hijos de P. Aboitiz; it ventured into passenger
shipping in 1918 when Ramon bought the steam launch Tubig from Smith, Bell and Co. Ramon filed a
petition before the Commission on Public Utilities for a license to operate the route between the Cebu
and Leyte ports of Baybay, Inopacan, Hilongos, Bato and Hindang. In May 1919, Ramon, his wife Dolores
and son Eduardo left for Spain after he sold his shares to his brothers, Guillermo and Vidal; with the
success of the family business, Ramon thought that his mother and siblings can live comfortably when
he left for Spain. Guillermo and Portuguese Arnaldo F. Silva formed a corporation called Aboitiz y
Compania Incorporada and capitalized at P1.25 million and P500,000 paid-up capital.The Bureau of
Commerce and Industry approved the corporation papers on Feb. 4, 1920.The Aboitiz cousins, Manuel
Moraza and Joaquin Yrastoza, joined the corporation after they bought 300 and 50 shares, respectively.
Aboitiz brothers Paulino and Luis each owned 100 shares.

TROUBLE

A few months later, the business was in trouble and the corporation, deep in debt, was on the brink of
bankruptcy. Responding to the family’s call for help, Ramon returned to Cebu in September 1920, 14
months after he left. He learned that the company owed P2 million to the bank and to others. He wrote
to Silva, the company president and general manager: "The biggest fortune that I have is my word and
my reputation. Money can be lost and can be recovered, but once reputation is lost and one’s word is
worthless, one is surely finished. "Against the advice of many, he refused to declare bankruptcy. Instead,
he negotiated with Philippine National Bank (PNB) Cebu manager Jose Martinez for the restructuring of
the P800,000 loan. He also borrowed from businessman Joaquin Castro and Gotiaco Hermanos.At the
same time, he convinced Macleod and Smith Bell to advance funds to the company in exchange for a
first choice of any abaca shipment. Twenty years later, Ramon was able to pay off the loan. Business was
booming as demand for hemp and copra grew steadily.

WAR PERIOD

When World War II broke out, Japan invaded Cebu on April 10, 1942. The Aboitizes went about doing
the business in spite of the difficult circumstances. The war struck its hardest blow shortly before it
ended when bombing by both sides destroyed their knitting factory in Manila, the power plants in
Mindanao, a portion of their shipyard on Mactan Island, hardware store and ice plant in mainland Cebu.
The business empire that Ramon built with the help of his brothers and cousins survived the devastation
of the war due to a decision to diversify. Two businesses, the knitting factory and liquor operation,
continued to earn an income throughout the war years. Despite the destruction of many company
assets, Ramon remained unfazed. He, his brother Vidal and cousins went on to rebuild their various
enterprises with some of the company assets that survived.
US NAVY PERIOD

The company’s Cebu Shipyard and Engineering Works entered into a contract with the US Navy for the
exclusive use of the area for two years.The post-war years saw the family forming another shipping
company, started manufacturing oxygen, reviving operations of its power firm Cotabato Light and Power
Co. and bought the franchise of Davao Light and Power Co. The growth of Aboitiz and Co. from a trading
firm into a conglomerate can be attributed to the astuteness and keen sense of timing. Through the
years, the company has the knack of seeing possibilities in businesses and selling these off at the right
time. While Ramon took some risks, he did so after carefully studying the situation. When he acquired
Cebu Ice & Cold Stores Corp. in February of 1926, the company invested a lot, buying new equipment.
The new acquisition provided cold storage and sold ice, distilled water and refrigerated fruits and meats.
After upgrading the equipment, Ramon learned that electric refrigerators were being introduced to the
Philippines. He decided to continue operations of the ice plant when after a market study, he learned
that only 20 percent of his market can afford to buy refrigerators. Ramon’s business acumen has
enabled the company to survive the challenges. His timing was almost perfect, acquiring a business at its
peak or with potential and selling it when business is bad and still earn profits for the company. Ramon's
sons and nephews were able to steer the business to continued growth.

CHANGING OF GUARDS

Management of the company was first handed to Ramon’s son, Eduardo, and then to Ramon’s brother,
Luis, before Eduardo’s son, Jon Ramon, took over. The changing of the guards brought many changes.
Aboitiz & Co. went public in 1994 through Aboitiz Equity Ventures, a holding management company for
businesses in power distribution, financial and insurance services, food and industrial production. The
new management has also made use of information technology by participating in Bayantrade, a
procurement exchange company, through AEV. Bayantrade is a partnership with Ayala Corp., Benpres
Corp., JG Summit, Philippine Long Distance Telephone Co. and United Laboratories. Another strategy is
the use of IT to increase productivity of company employees. "Every company has to have an Internet
strategy because future business is completely intertwined into the Internet and e-commerce," notes
Jon Ramon. Aboitiz & Co. is also into industrial and commercial real estate development (through
Aboitizland), banking (Union Bank and City Savings Bank), power distribution and generation, freight
forwarding and food-related business (Pilmico Foods Corp.).According to Jon Ramon, the company’s
main thrust is to work for the growth of AEV businesses especially banking and power. He has high
hopes for the company as he believes that the family members will continue to work together despite
the diversity. "You have to work at it to ensure you have the harmony to move forward," he said.

WHAT ARE SOME OF THE RULES THAT FAMILY MEMBERS SHOULD FOLLOW WHEN WORKING FOR THE
GROUP?

1. The principle of meritocracy applies to all family members or professionals, regardless of who
the person is or his parentage.
2. All family members who want to work for the group must apply
3. Relatives applying must be qualified and have competitive credentials vis-à-vis the professional
managers.
4. Relatives should have good academic preparation and are first encouraged to work at least two
years for other companies outside the group.
 5. Normally, the clan wants family members to start in operating positions first within the group
before promoting them to any managerial positions, so they will know what’s happening with
the rank and file, and with the diverse operations. They never start relatives at the top positions.
6. Relatives who work with the group are not allowed to have any sidelines or other business
interests, but must focus on their duties.
7. All relatives who work for the group must retire at age 60, with the goal of encouraging more
younger kin to rise and take over important duties or responsibilities.
8. The fairness principle must be upheld within the clan.
9. Regular meetings, open communications and transparency are promoted within leaders of the
clan. It is important to have constant communications.
10. Never take any family or clan member for granted.
11. Do not forget the moral and cultural values of the clan forebears.
12. Clan members are close-knit, often doing things together, traveling on overseas vacations with
cousins or sleeping over at each other’s homes, even as kids. Many third-degree Aboitiz cousins
consider fellow cousins brothers and sisters, building relationships based on mutual trust and
respect.
13. The collective family elects the leader of the business conglomerate until he retires at age 60
and another leader is chosen.
14. The whole Aboitiz clan believes in continuously adapting to innovation and new ideas, because a
leader said, “If you don’t adapt, one day you might become extinct.”

FAMILY COUNCIL:

1. The family holds regular meetings to discuss issues. This practice was formalized when they
formed the family council.
2. During council meetings, the Aboitizes argue on issues and make a decision according to the
wishes of the majority, explained Jon Ramon.
3. After a decision is made, everybody abides