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Ayala profits slump 50%

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Ayala Corp., the country’s biggest and oldest conglomerate, said consolidated net income for 2008 slumped 50 percent from P16.2 billion to P8.1 billion.

Total revenues rose by half a percent from P78.77 billion to P79.11 billion.

The lower income resulted from the P2.4 billion drop in equity earnings from affiliates and the P5 billion drop in other income which represented earnings from sale of a building in 2007.

Loss from a hedging contract for its e-firms likewise pulled down income.

Ayala Land and Manila Water all posted positive results but its business process outsourcing and electronics businesses suffered losses.

Ayala president Fernado Zobel de Ayala said current distressed conditions still present opportunities.

He said that the conglomerate has enough cash to take on these opportunities.

Ayala’s real estate unit, Ayala Land, Inc., posted record earnings of P4.8 billion in 2008, 10 percent higher than the prior year.

Bank of the Philippine Island’s (BPI) net income fell 36 percent to P6.4 billion due to a P2.8 billion decline in securities trading income and a P1.3 billion decline in non-recurring investment income of the insurance subsidiaries.

BPI’s deposit base also expanded by 5 percent at P540 billion by year-end, with total customer funds and assets held in trust up by 8.9 percent. The bank’s remittance business also saw strong growth, up 35 percent, with volume reaching $4.4 billion, significantly outpacing the industry’s 15 percent.

Globe Telecom net income dropped 15 percent to P11.3 billion. Consolidated revenues reached P62.9 billion from P63.2 billion the prior year. Wireless revenues were flat amidst a 22 percent growth in its subscriber base while revenues from its wireline business increased by 7 percent, driven by its corporate data and broadband businesses. Globe’s broadband subscriber base grew by 84 percent in 2008 with the highest net adds noted in the fourth quarter.

Globe recently declared first semi-annual cash dividend of P32 per share.

Earnings for AC Capital meanwhile declined, weighed by non-recurring losses from its electronics unit, Integrated Microelectronics, Inc. (IMI), AG Holdings and BPO companies under LiveIt. This offsets the positive earnings contribution of its water and automotive dealership businesses.

IMI’s revenues grew 5 percent in 2008 due to strong double-digit growth of its operations in China and Singapore which offset slower volumes from Philippine and US operations. Increased business with a leading Chinese telecommunications company and new customer programs cushioned the impact of the general slowdown in demand. IMI’s operating income remained positive at $18 million, however, a non-recurring loss from currency hedging contracts as well as a one-time provision for manpower expenses and inventory obsolescence expenses resulted in a US$16 million loss in 2008.

The BPO units further diversified their client base in 2008 with eTelecare winning 11 new clients and 31 new programs, Integreon adding 14 new customers across the corporate, legal and financial services sectors, and Affinity Express now serving over 140 publications of seven of the top 25 newspaper companies in the US.

The companies however posted a combined net loss, of which LiveIt’s share was P874 million, due primarily to factors such as one-time non-recurring expenses related to the eTelecare tender offer, non-cash accounting charges, such as stock compensation expenses and the amortization of intangibles related to the investments in investee companies, and unfavorable foreign exchange forward contracts that eTelecare entered into.

LiveIt, together with Providence Equity Partners, completed the tender offer for eTelecare’s common shares and American Depositary Shares last December resulting in the acquisition of 98.7 percent of eTelecare’s shares.

Manila Water net income is at P2.8 billion on the back of higher water sales volume complemented by further improvements in the company’s operating efficiency, as the company engaged in intensive capital expenditure program.

"The global crisis will no doubt further temper domestic consumption and will inevitably impact demand for some of the products and services of our operating units, in varying degrees. However, we remain optimistic that we can manage through the challenges given the solid business models of each of our operating units, their strong fundamentals and balance sheets, and dominant market positions," said Ayala.


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