ALI sees sustained business recovery from slump

Property giant Ayala Land Inc. expects businesses to return to pre-coronavirus (COVID-19) pandemic levels in two to three years after the unprecedented business disruptions that dragged down its net profit by 74 percent last year.

A V-shaped recovery is expected starting this year, during which ALI has earmarked P88 billion in capital outlays, higher than the P63.7 billion actual capital outlays last year, ALI president Bernard Vincent Dy said in a briefing on Wednesday. About P100 billion worth of fresh property inventory, mostly residential offerings, is planned this year.

ALI’s net profit slid last year to P8.7 billion from P33.19 billion in 2019 as the pandemic gnawed on all businesses. However, ALI sustained the momentum for recovery from the third to the fourth quarter, recording a 49-percent growth in total revenue quarter-on-quarter to P33 billion and a 28-percent jump in net income to P2.4 billion for the period.

“There was no escaping the major disruption caused by the pandemic in 2020, but our company’s performance in the latter part of the year was encouraging and provides a baseline for our recovery plans moving forward. In 2020, greater value was placed on maintaining a strong balance sheet to weather this crisis and prepare our company to resume our growth aspirations,” Dy said.

“Operating procedures were also put in place to ensure the safety of our people and our customers and initiatives were introduced to provide assistance to various stakeholders during this difficult period,” Dy added.

Consolidated revenue declined by 43 percent year-on-year to P96.3 billion, as the pandemic weighed on earnings from residential development as well as shopping mall and hotel operations.

For 2020, revenue from property development was halved to P66.5 billion from P117.6 billion in 2019. In the fourth quarter alone, however, property development revenue surged by 64 percent quarter-on-quarter, boosted by continuous construction progress in 174 projects across the country.

As an indicator of future revenue performance, ALI generated sales reservations of P81.9 billion, 56 percent of the level in 2019. However, this level was achieved despite mobility restrictions arising from lockdown measures last year. Fourth quarter sales reservations reached P21.1 billion, representing 58 percent of pre-COVID levels.

Commercial leasing revenue contracted by 44 percent to P21.9 billion in 2020 given limited mall and hotel operations, although mall revenue improved by 10 percent to P1.7 billion in the fourth quarter from the third quarter, on account of less strict community quarantine restrictions, coupled with the holiday season boost.

The latter part of 2020 also saw El Nido Resorts and Lio Tourism Estate hosting more travel bubbles to the public in close coordination with the Department of Tourism and the local government units. From only four in the third quarter, a total of 37 travel bubbles were launched in the fourth quarter, driving a 52 percent quarter-on-quarter increase in revenues to P787 million.

ALI’s capital expenditures reached P63.7 billion in 2020, in line with the revised full-year budget. These were allocated mainly for the completion of residential and commercial leasing assets, with a portion spent on land acquisition and development of estates. Financial sustainability initiatives for the year also helped strengthen the balance sheet.