A Year of Synergies: How Synergies are Contributing to Aboitiz’ Value Creation Model
By: Eduardo V. Aboitiz and Aly Virrey
Synergy has always been a part of the Aboitiz DNA. Back in the day, we started with abaca production. Then we began producing rope which was mainly sold to the shipping industry. This connection opened the doors for us to invest in shipping – the Aboitiz Group’s flagship business for over 100 years. Looking back, it’s amazing how this seemingly small synergy of abaca to rope production to shipping — played a huge role in defining where we are today.
While we know how to create synergies, we need to be more deliberate in our efforts to fully maximize these opportunities within the Aboitiz ecosystem. The concept of Synergy was first formalized at the 2023 Leaders’ Conference (LeadCon), where our Group President and CEO Sabin Aboitiz introduced a vision for our Strategic Business Units (SBUs) to unlock synergy opportunities and generate incremental value.
The 2023 LeadCon was a pivotal moment, marked by the signing of landmark agreements by the Group Management Committee. One agreement focused on maximizing synergy across the Aboitiz Group by integrating tangible and intangible assets and leveraging natural links to build ecosystems. Another prioritized data sharing to enhance collaboration and drive innovation.
In response, the AEV Synergy Office was established in mid-2023. Our goal is to generate incremental value by maximizing the network effect of the Group and unlocking new opportunities and ecosystem plays. Our approach is anchored on three pillars:
- Supporting AEV’s transition from an Owner-Operator model to an Investment Portfolio Manager.
- Enabling Aboitiz’s cultural transformation.
- Driving value creation.
The purpose of Synergy is to ensure the collective strength of the Group delivers more than the sum of its parts. For every Team Member, this means opportunities to contribute, innovate, and collaborate to drive growth and shared success.
2023 Achievements and 2024 Momentum
Over the past year, the Synergy Office has worked closely with the SBUs to identify new opportunities, address roadblocks, and promote cross-SBU collaboration. This includes setting targets, monitoring projects, organizing forums, and raising awareness on the value of Synergy.
In 2023, we began monitoring and quantifying Synergy initiatives across the Group, totaling to PhP 8.5 billion in Synergy revenue with a Net Income After Taxes (NIAT) contribution of PhP 570 million. In 2024, the Group is tracking PhP 11.2 billion in Synergy revenue, a 32% increase, with a projected NIAT contribution of PhP 762 million.
The Group delivered strong results in 2024 through various initiatives such as:
● PhP 5 billion-worth of retail energy supply contracts for AboitizPower (AP)
● PhP 2 billion-worth of construction projects for Aboitiz Construction, Inc. (ACI)
● Incremental synergies, includingPhP 227 million from ACI maintenance contracts and
PhP 34 million from UnionBank’s (UBP) supplier conversion efforts
These results are proof of SBUs taking the lead in driving their own Synergy initiatives forward. In 2025, we will showcase eight success stories to highlight how synergies are manifesting across our portfolio:
● A Synergetic Boost: ACI Maintenance’s Billion Peso Pipeline
● Our Purest Synergy Play: Economic Estates as a Platform for Greater Group Value
● Illuminating Synergies: AP’s Expanding Solar Capacity, Using Idle Land and Rooftops
● Building Synergies: ACI Construction’s Contributions Across the Group
● Synergy of Scale: Group Procurement’s Strategic Synergies Driving Cost Savings
● Powering the Synergy in Banking: UBP Amplifying Value Through The Ecosystem
● Soaring to New Synergies: AIC Airports as an Aboitiz Ecosystem Builder
● Unbottling Synergies: Unlocking the Synergies Within Coca-Cola
The Four Synergy Archetypes
Over the past 18 months, we have observed four synergy archetypes, helping us to categorize SBU synergies.
The Ecosystem Builder archetype is about taking advantage of the growth and multiplier effect of Aboitiz platform businesses. The best examples are the Economic Estates and the Coca-Cola system where SBUs can provide services to support their operations.
Meanwhile, the Captive Market Provider archetype is about capturing and servicing the requirements of the Group, complementing Ecosystem Builders. For example, ACI providing construction and maintenance services to the SBUs, AP supplying power to our assets, and UBP meeting the banking needs of the Group.
The Knowledge Sharer archetype is about sharing best practices, expertise, knowledge, and data to unlock cross-selling opportunities. An example is the Synergy Working Group, which brings together SBU representatives to enable collaboration, align on strategies, and develop projects – even something as simple as creating a WhatsApp Group to serve as a conduit for cross-SBU communication.
Lastly, the Aggregator archetype is about leveraging our scale as a Group for procurement or bundling of products and services. An example is the Groupwide agreements with key IT partners and vendors, such as on shared volume licensing agreements. The already-signed agreements are forecasted to result in more than USD 1 million in cost savings by mid-2025, with more group agreements under way.
We all have a role in unlocking synergy opportunities and ecosystem plays that contribute to the value creation model of the Group. We should be mindful of these archetypes as we approach synergies in our portfolio, which will allow us to be more intentional in spotting, evaluating, and developing synergies within our respective SBUs.
The Path Forward
In 2025, we aim to grow Synergies to PhP 12.9 billion in revenue – a 15% increase – with a potential NIAT contribution of Php 841 million. There are numerous projects in the pipeline and we are excited to unlock these opportunities together.
Looking further ahead, we want to go beyond cross-SBU Synergy opportunities. Our vision includes deeper collaboration and greater value extraction through a cross-selling platform that leverages SBU customer data.
Aboitiz is just beginning its Synergy journey. While we’ve made strides in harnessing synergies from SBUs and suppliers, the next step is to engage our partners, customers, government stakeholders, and communities. This will drive greater impact and incremental value for the Group.
2024 is the Year of Synergies – a milestone in the Great Transformation. By embedding a Synergetic culture across SBUs, we are building the foundation to create and drive value – making the whole greater than the sum of its parts – that will strengthen the Aboitiz ecosystem and provide us with a competitive advantage.
Let’s continue driving Synergy to achieve even greater results for the Philippines’ first Techglomerate!
Learn more and share ideas with the AEV Synergy Office at aev-synergy-office@aboitiz.com.