Ayala reports over P9 B in 2011 profit
MANILA, Philippines—Ayala Corp. reported on Friday a net income of P9.4 for 2011, a decline of 16 percent due to hefty non-recurring gains that were booked the previous year.
But the Ayala group has committed to invest more for future growth and value creation, thereby setting aside P91 billion for capital expenditures this year, an increase of 38 percent from its outlays last year.
The bulk of this year’s budget is for real estate development, network improvement in its telecom unit and acquisitions as well as investments in its water business.
Excluding non-recurring items in 2011, Ayala’s core net profit went up by 16 percent, driven by record-high net profits chalked up by its real estate, banking and water units as well as improvements in its telecom, international real estate and business process outsourcing businesses (BPO), the company disclosed to the Philippine Stock Exchange on Friday.
Extraordinary gains last year amounted to P611 million compared to the hefty P3.6 billion non-recurring gains booked in 2010.
“We are pleased with the solid performance of our core businesses in real estate, banking, telecom and water,” said Ayala president Fernando Zobel de Ayala. “Their growth momentum has been very positive and they remain dominant in their respective industries despite intense market competition across these sectors.”
“We expect the growth trajectory of our businesses to continue as we aggressively expand our products and services to address the needs of a still largely untapped segment of our population. We also expect our international businesses to improve their profitability moving forward as they benefit from scale following their acquisition initiatives the past years and as they benefit from cost optimization efforts,” Zobel de Ayala said.
Ayala said most of its core units posted record earnings in 2011, particularly Ayala Land (up 31 percent to P7.1 billion), Bank of the Philippine Islands (up 13 percent to P12.8 billion) and Manila Water (up 7 percent to P4.3 billion).
Globe Telecom grew its core net income by 11 percent to P10 billion, outperforming the industry. Reported net income was flat at P9.83 billion versus a year ago.
Earnings of Ayala’s international real estate business turned positive last year due to gains realized from an exchange in ownership in Arch Capital and Arch Capital Asian Partners with The Rohatyn Group. The year 2010 also included provisions for certain assets in its US operations.
Ayala also reported that the four investee companies under BPO holding company LiveIt Investments had reduced net losses as cash flow benefited from greater scale and cost efficiencies.
Meanwhile, electronics manufacturing unit Integrated Microelectronics posted a 31 percent decline in net profits last year to $3.3 million as high input costs gnawed at margins.
Last year, parent company Ayala established a platform for its new businesses in the power and transport infrastructure space. In 2011, the holding company committed capital of close to P7 billion for the development of projects in solar, wind, hydro, and thermal power generation, as well as for the construction of a four-lane, four-kilometer road that will link Daang Hari road in Cavite to the South Luzon Expressway under the first public-private partnership (PPP) project of the Aquino government.
Ayala’s share price has surged by over 30 percent since the start of 2012 as analysts see its strong balance sheet enabling it to grab more opportunities in the infrastructure space.
Ayala earlier announced a long shopping list of PPP projects it wants to participate in, particularly rail, road, and airport-related projects.
The conglomerate has also kept a strong capacity to invest more in the infrastructure space. It ended 2011 with a parent company cash level of P18 billion and a very low debt to equity ratio. Return on equity in 2011 was at 9 percent.
