Ayala Corp.'s net income up 12%

Business Mirror
Feb 21, 2006

Ayala Corp.'s net income up 12%

By Honey Madrilejos-Reyes
Correspondent

THE collective strong performance of its various subsidiaries jacked up the net income of Ayala Corp. in 2005 to P8.2 billion from P7.3 billion the previous year.

In a statement issued Monday, Ayala president and chief executive officer Jaime Augusto Zobel de Ayala II said the 12-percent growth was driven by the collective strong performance of its operating subsidiaries, which resulted in a 10-percent growth in equity earnings. Lower interest expense as well as gains from the sale of shares in Ayala Land and Manila Water provided earnings a further lift, he added.

"We are delighted with the performance of our operating subsidiaries and are optimistic that the strategic steps undertaken this year will sustain our growth momentum and create greater value for the company moving forward," Zobel de Ayala said.

"We are also encouraged by some of the emerging positive trends in the broader macro economic environment and are confident that our subsidiaries are well-positioned to capture new opportunities given their strong financial and market positions."

Ayala's property arm Ayala Land Inc. (ALI) posted consolidated profits of P3.6 billion in 2005, up 21 percent from 2004, with consolidated revenues up 22 percent to P22 billion.

This was underpinned by the robust growth of most of ALI's business lines. Revenues from its residential development business and shopping centers increased by 10 percent and 22 percent, respectively, as uptake of its high-end residential condominium and lot projects remained brisk.

ALI's support businesses in construction, property management, waterworks and hotels also contributed to revenues, growing by 6 percent.

Banking arm Bank of the Philippine Islands (BPI) posted a 21-percent increase in unaudited net income to P8.1 billion in 2005. The bank's total revenues grew 23-percnet driven by higher net interest and noninterest income.

Ayala Corp.'s major revenue driver Globe Telecom, however, recorded a 9-percent decline in net income to P10.3 billion, as revenue growth of 6 percent was outpaced by higher marketing and network-related expenses. A higher provision for income tax, which nearly tripled from the previous year following the expiration of its income tax holiday, also limited earnings growth.

As the company's fourth pillar of profitability, AC Capital contributed significantly to the group with equity earnings collectively up 44 percent in 2005. This was largely due to the strong performance of Manila Water and Integrated Microelectronics.

Manila Water Co. achieved record net income of more than P2 billion in 2005, 51-percent higher than the previous year. For its part, electronics subsidiary Integrated Microelectronics Inc. (IMI) posted full year 2005 net income of P1.4 billion, 18-percent higher than the amount posted the previous year.

Ayala Corp. ended 2005 with a much stronger balance sheet. Net debt at the parent level was at US$567 million from US$646 million at end-2004. In addition, debt mix improved further with its peso-to-dollar loan balance now at 61 percent 39 percent. This puts the company's net debt to equity at the parent level at 0.49 to 1.

Ayala Corp. shares, which traded before the earnings report, closed at P330, a 0.75-percent decline from Friday's P332.50.