Ayala Corp. nets P4.9B in first half

MANILA, Philippines—Ayala Corp. grew its six-month net profit by 12 percent to P4.9 billion from a year ago on higher earnings from its core property, banking, water and telecom businesses.

Equity earnings were up by 9 percent to P6.2 billion in the first semester as year-on-year growth in net profits were reported by subsidiaries Ayala Land Inc. (up 35 percent), Bank of the Philippine Islands (11 percent), Manila Water Co. (2 percent) and Globe Telecom (9 percent).

“The company’s results in the first half of this year reflect the positive economic environment and the robust domestic demand that has been sustained since last year. The aggressive moves of our business units to develop innovative products and services responsive to the needs of a much broader market have resulted in healthy revenue and earnings growth. We believe this momentum will continue through the rest of the year,”  Ayala president and chief operating officer Fernando Zobel de Ayala said in a press statement.

Group-wide profits were tempered by the decline in profits of the automotive and electronics manufacturing businesses while the business process outsourcing (BPO) unit was still in the red.

Ayala’s auto dealership business reported a 71 percent decline in six-month net income to P50 million in the first semester from a year ago. This was due to a 22 percent decline in revenues in the first half of the year attributed to lower vehicle sales as a result of supply disruptions seen lasting until the fourth quarter of the year. Despite lower sales,  Ayala dealerships maintained network leadership accounting for 46 percent of Honda and 32 percent of Isuzu sales nationwide.

Electronics manufacturing unit Integrated Microelectronics Inc. grew its six-month sales by 39 percent year-on-year, which included the sales of recently acquired PSi Technologies. Higher direct labor costs, however, resulted in a decline in gross profit and margins in the first half of the year, which put net income excluding one-offs 52 percent lower during the period.

Meanwhile, companies affiliated with LiveIt, the Ayalas’ holding company for BPO investments, reported a net loss of $12 million during the period. Combined revenues amounted to $489 million in the first half, of which LiveIt’s share amounted to $152 million, 16 percent higher than last year due to the growth of client volumes. LiveIt’s share of cash flow or earnings before interest, taxes, depreciation and amortization increased by 55 percent to $11 million while operating net income improved to nearly $1 million.

The reported net loss was driven largely by non-cash charges such as amortization of intangibles for Stream and Integreon’s acquisitions, and interest expense related to the leverage buyout of Stream, the disclosure said.

Ayala parent company ended the period with nearly P30 billion in cash and a low debt level of P0.17 per P1 of equity. It successfully raised P10 billion from an innovative bond issue last May and subsequently redeemed its P5.8 billion worth of preferred shares last July.

The conglomerate recently ventured in the power generation sector as part of plans to build a portfolio with 1,000 megawatts in capacity over the next five years.

Originally posted at 2:49 p.m.