Ayala profit up 62%; capex set at P285B for 2022

Conglomerate Ayala Corp. grew its net profit last year by 62 percent to P27.8 billion, beating market estimates, due to higher earnings contributed by its property, banking, telecommunications and energy businesses, alongside one-time gains.

This net income stood 18.8-percent better than the P23.4-billion bottom line that the market expected Ayala to deliver for 2021, based on Bloomberg consensus forecast. This also accounted for about 79 percent of Ayala’s prepandemic earnings.

Excluding gains and other one-off items that were mostly recognized in the fourth quarter, Ayala’s core net income fell by 10 percent to P23.5 billion, driven by weaker net interest income of banking arm Bank of the Philippine Islands and higher depreciation expense of Globe Telecom. This also reflected a reduction in its stake in AC Energy following the completion of its capital market issuances and sale of secondary shares to sovereign wealth fund GIC, combined with higher financing cost at the AC Energy parent level.

Ayala generated extraordinary gains from transactions in 2021, including a reassessment of its stake in Manila Water following the sale of secondary shares to Trident Water, the sale of the Ayala group’s stake in GNPower Kauswagan and the entry of a new investor in GCash operator Mynt.

“We continue to see an improvement in the business environment with better mobility and ability of both enterprises and consumers to adjust to disruptions. With the recent deescalation of quarantine measures to the lowest status, we are hopeful that 2022 will be the start of our country’s recovery,” Ayala president and CEO Fernando Zobel de Ayala said in a press statement on Friday.

Effect of oil price surge

He said the group has allocated P285 billion for capital expenditures (capex) this year.

“We are, however, mindful of the impact of the Russia-Ukraine conflict on our recovery and investment programs. In particular, we are carefully monitoring how the surge in oil prices would affect domestic interest rates, inflation and the global supply chain,” Zobel noted.

Of the P285-billion in group-wide capital outlays for this year, P24 billion is earmarked for the parent company to fund investment opportunities. This year’s budget is 25-percent larger than last year’s actual capital expenditure of P228 billion.

This 2022, market consensus expects Ayala to deliver at least P32 billion in net income or about 91 percent of its prepandemic profits. —Doris Dumlao-Abadilla