Ayala nets P30B

Fernando Zobel de Ayala

Conglomerate Ayala Corp. grew its net profit last year by 16 percent to P30.3 billion, led by the double-digit expansion in earnings from its real estate and energy businesses.

This year, the Ayala group is increasing its capital expenditures by 44 percent to P249 billion, largely to support the investment program at the parent conglomerate level as well as the growth strategies of Ayala Land, Globe Telecom and Manila Water.

At the parent level, Ayala has earmarked P51.8 billion in capital spending this year, primarily to fund its subscription to Bank of the Philippine Islands (BPI)’s stock rights offering and its investments in AC Energy, AC Industrials, AC Education and AC Health.

“We are happy to see this earnings momentum sustained for the sixth consecutive year as the expansion strategy across our portfolio of businesses continues to bear fruit. Consistent double-digit growth since 2012 has translated to a compounded annual growth rate of 22 percent. We remain positive about our trajectory as we move closer to our 2020 goals,” Ayala president and chief operating officer Fernando Zobel de Ayala said in a press statement on Monday.

Equity earnings contributions from Ayala’s business units rose by 12 percent to P35.8 billion, led by Ayala Land and AC Energy, whose contributions expanded by 21 percent and 30 percent, respectively.

AC Energy’s net profit jumped by 31 percent to P3.5 billion in 2017, primarily driven by fresh equity earnings contribution from its geothermal platform, and boosted by solid contributions from its wind energy assets.

A strong wind regime bolstered the better performance of NorthWind and North Luzon Renewables during the year. Services income derived from the financial close of a new power plant likewise contributed to net earnings.

The resurgence of property sales combined with a solid leasing business, on the other hand, drove Ayala Land’s net earnings during the year, jumping by 21 percent to P25.3 billion.

AC Industrials registered a net income of P1.2 billion, up 4 percent from its year-ago level, on better performance of both its electronics manufacturing and vehicle retail units. Integrated Microelectronic Inc.’s net earnings expanded 21 percent to $34 million on the back of solid revenue growth. Meanwhile, revenues from AC Automotive expanded 37 percent to P31.2 billion, boosted by strong sales across all brands—Honda, Isuzu, Volkswagen, and KTM.

AC Health, for its part, continues to scale up its platforms in retail pharmacy and primary care. Generika, its retail network of affordable quality generic medicines, recorded P3.3 billion in revenues, up 15 percent from a year ago on higher retail sales and store expansion. It opened 100 stores in 2017, bringing total store count to 750. AC Health is targeting to ramp up Generika’s total store count to 850 by the end of 2018.

Earlier, it was announced that banking arm BPI recorded a net income of P22.4 billion last year, up 1.7 percent from its year-ago level, as the absence of one-off gains tempered strong growth in its core banking business during the year. Excluding one-off gains from the sale of securities in 2016, net income grew by 31 percent last year.

Globe Telecom’s net earnings dropped by five percent to P15.1 billion in 2017 due to higher operating expenses and depreciation charges as a result of increased investments in its data network.

Manila Water posted a muted net income growth of one percent to P6.2 billion as higher operating expenses and business development costs tempered revenue growth during the year.

Consolidated assets of the Ayala group stood at P1.02 trillion last year, 12 percent higher from the previous year.