051107: Ayala Corp profit jumps 80% to P5.6B in Q1

By Zinnia B. Dela Peña
The Philippine Star 05/11/2007

Ayala Corp. reported yesterday a net profit growth of 80 percent in the first quarter this year to P5.6 billion, mainly driven by the robust performance of all its core units, aided by gains from share sales.

In a financial report filed with the Philippine Stock Exchange, Ayala Corp. said the amount was its highest quarterly income ever, even as growth was partly tempered by extraordinary items incurred during the period.

Equity earnings fell to P3.35 billion from P3.69 billion a year earlier. Excluding the one-off items, however, Ayala Corp.’s key business units registered strong double-digit growth and would actually put equity earnings seven percent higher year-on-year.

Ayala Corp. president and chief operating officer Fernando Zobel de Ayala expressed confidence that the group can sustain its gains for the rest of the year. "We remain optimistic about our growth prospects this year and moving forward. Each of our business units continues to be in a strong financial position and is pursuing their respective strategic initiatives to set the platform for sustained growth in the coming years."

The group has set aside about P47 billion in capital expenditures this year, higher than the year ago’s P42 billion. "This is a substantial increase from the group’s capital expenditure commitment several years back and is a reflection of our confidence in the current business environment as well as the positive trends in the broader economy," Zobel de Ayala said.

Lower financing expense during the period under review also contributed to the earnings growth as outstanding gross loans at the holding company level continued to decline and is now eight percent lower year-on-year at P36.3 billion.

Ayala Corp.’s financial position strengthened with net debt substantially reduced to $374 million (P18 billion) from $462 million (P22.6 billion) at the start of the year. Net debt-to-equity ratio further improved to 0.22 to one from 0.29 to one.

For his part, Ayala Corp. chairman and chief executive officer Jaime Augusto Zobel de Ayala said: "We are pleased to see the growth momentum sustained in the first quarter. Economic conditions have been favorable for the group to pursue its growth initiatives.Our strong financial position provides us the flexibility to explore new opportunities even as we nurture our new investments in the business process outsourcing space and support our real estate investments in the international arena. We believe these new growth initiatives have the potential to provide greater value for the group in the coming years."

Property unit Ayala Land Inc. posted a net profit of P1.3 billion during the quarter, up 10 percent from the previous year, boosted by gains from the sale of Oakwood Premiere to the Ascott Group early this year.

Ayala Corp.’s banking arm Bank of the Philippine Islands reported a 28-percent growth in net income to P3.2 billion. This includes a P416- million gain on a sale of a property of one of its subsidiaries. Revenues likewise increased 26 percent, driven mainly by non-interest income from foreign exchange and securities trading, while net interest income increased 11 percent.

Telecommunications arm Globe Telecom, on the other hand, reported a 25-percent drop in net income due to a non-recurring P1.2-billion after-tax impact of an early bond redemption. Revenues, however, increased 10 percent as wireless revenues went up 11 percent and wireline by three percent. Net subscriber addition reached 1.3 million, the highest achieved in a quarter over the past two years, putting Globe’s total subscriber base up 28 percent year-on-year to 16.9 million.

Meanwhile, investment holding unit AC Capital posted a net income of P1.8 billion, 25-percent higher year-on-year despite non-recurring items recorded by Integrated Microelectronics Inc. (IMI) and the expiration of Manila Water’s income tax holiday. It accounted for 21 percent of the first quarter’s equity earnings.

Manila Water earned P509 million, 15 percent lower than the previous level despite a 19-percent growth in revenues. Billed volume hit a record high of 992 million liters per day, up 12 percent. Non-revenue water reached an all-time low of 27 percent while gross income grew at a faster pace at 33 percent to P1.13 billion.

IMI also registered a nine percent growth in revenues to $98 million with Philippine operations accounting for 53 percent of group revenues. Net income, however, fell 35 percent mainly due to one-time accounting adjustments and expenses related to the integration of its global operations. Volume requirements from major Japanese customers are expected to increase in the second quarter of the year due to strong end customer demand as global personal computer shipments are expected to increase by 10 percent in 2007.

 

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