Ayala Corp. CFO Teodoro Limcaoco, chair/CEO Jaime Augusto Zobel de Ayala, president/COO Fernando Zobel de Ayala
The country’s oldest business house, Ayala Corp., is sowing the seeds to become a global player, counting on four of its businesses—manufacturing, water infrastructure, energy and property —to expand overseas footprint to account for 10 percent of group-wide earnings by 2020.
“These are steps that Ayala has not taken in a long time… Increasingly, we’re taking bolder and bolder steps outside, in nontraditional areas. We’re stretching our capabilities and moving beyond our shores,” Ayala Corp. chief executive officer Jaime Augusto Zobel de Ayala said in a briefing after the company’s stockholders meeting yesterday.
Through AC Industrials, Manila Water, AC Energy and Ayala Land Inc., Zobel said Ayala had built a range of assets in a global setting in complex industries and highly competitive environment.
Zobel said the conglomerate was harnessing locally-built expertise, governance standards and partnerships developed over the years to expand overseas.
Equity earnings contribution from overseas operations grew to 7 percent last year from 5.4 percent in the previous year. AC’s international revenue reached P61.6 billion from P43.1 billion in 2016.
Last year, AC Industrials acquired manufacturing facilities in Germany, the UK and Thailand, adding to its existing footprint in China, Singapore, US, Mexico, Bulgaria and Czech Republic. It will soon open a factory in Serbia and has completed the consolidation of production sites in China.
AC Industrials’ Integrated Micro-Electronics Inc. (IMI) is now the world’s sixth largest electronics manufacturing services provider for the automotive industry. IMI, which has set up a local motorcycle manufacturing hub in Laguna in partnership with KTM, is now exporting motorbikes to Thailand and China and recently passed qualification requirements to export to Vietnam.
By 2020, the local KTM hub will likely produce 10,000 units of which 5,000 to 6,000 will be for export, IMI and AC Industrials CEO Arthur Tan said. To date, the factory has capacity to produce 30,000 units, which will be expanded further.
For Manila Water, overseas expansion started in Vietnam 10 years ago, and has since then invested $120 million in this market. It has also invested $170 million in Thailand with the acquisition of 18 percent of East Water, and in Indonesia with a 20-percent stake in water company PT Sarana Tirta Ungaran.
Manila Water now generates 5-6 percent of its net income overseas. “We hope to triple or quadruple that in the next five years as we gain more traction with the Asean (Association of Southeast Asian Nations) region as focus,” MWC president Ferdinand dela Cruz said .
For AC Energy, company president Eric Francia said that of the first $1-billion in committed capital, 20 percent had been invested overseas, particularly in Vietnam and Indonesia. The next $1 billion that the energy company will invest will likely have more than 50 percent earmarked for overseas expansion.
“So in a matter of years, the share of international business will go closer to 30 -40 percent from 20 percent,” Francia said, adding that AC Energy was now looking at opportunities in other markets.
For Ayala Land, the acquisition of Malaysian development and construction firm MCT Berhad is seen to become its vehicle to expand across the region. MCT recently invested P2 billion to acquire a 9.8-hectare landbank in Klang Valley, where its investment is expected to double in the next two to three years.
—DORIS DUMLAO-ABADILLA