Ayala Corp. sets P196-B capex for 2021 amid pinch from virus

Conglomerate Ayala Corp. will resume a more aggressive capital spending this year with a budget of P196 billion primarily for emerging businesses, aiming to reclaim a growth trajectory that was disrupted by the pandemic.

Ayala booked a 51-percent drop in net profit last year to P17.1 billion, although a sustained improvement in sequential earnings was seen in the fourth quarter.

Excluding nonrecurring items, Ayala’s core 2020 net income fell by 16 percent to P26 billion. Among the one-off items was a revaluation loss of P18.1 billion that had been recognized in December 2019 from the reclassification of its investment in Manila Water, albeit a partial reversal of the loss provision was made in 2020.Ayala reported a sequential core earnings improvement of 46 percent to P6.8 billion in the fourth quarter versus the third as quarantine and mobility restrictions in the country improved various businesses.

“We expect this trajectory to continue and lead to a full economic revival by 2022 as mobility further improves and as the country executes the vaccination rollout as planned,” Ayala president and chief operating officer Fernando Zobel de Ayala said in a disclosure to the Philippine Stock Exchange on Thursday.

“A continued push for private sector investments would help revitalize the economy,” Zobel added, citing the firm’s P196-billion capital spending for the year.

In 2020, consolidated capital expenditure amounted to P152 billion, of which P12.1 billion was disbursed by the parent conglomerate mostly for newer businesses.

Because of the pandemic, Ayala Land, BPI and Globe Telecom saw respective declines of 74 percent, 26 percent and 16 percent in net profit last year to P8.7 billion, P21.4 billion and P18.6 billion.

Among its emerging businesses, the AC Energy group saw a decline in net income to P6.2 billion from P24.5 billion in 2019. The year-ago level included gains from the partial divestment of thermal assets. —DORIS DUMLAO-ABADILLA