Vol. XXII, No. 136 [ BusinessWorld Online ]
Wednesday, February 11, 2009 | MANILA, PHILIPPINES
PROPERTY DEVELOPER Ayala Land, Inc. is taking a cautious stance this year because of the slowing global economy, even after posting a 10% hike in profits last year.
In a briefing yesterday, Ayala Land Chief Financial Officer Jaime E. Ysmael said it would be challenging to launch new projects, adding that they still had to finish several ongoing ones.
"We all know that [times] are difficult and the country is starting to feel the effects [of the economic crisis] and real estate is not excused," he told reporters. The market of Filipinos working abroad have also started tightening their belts," Mr. Ysmael said.
Ayala Land, the country’s largest property company, has earmarked P17.4 billion for capital spending this year, 8% lower than last year.
Several big companies, including Philippine Long Distance Telephone Co., have cut capital spending this year as consumer demand eases amid a deepening global downturn.
Ayala Land, a subsidiary of the country’s oldest conglomerate Ayala Corp., told the stock exchange on Tuesday it had secured funding for most of its 2009 spending plan.
Its 2008 profit went up by a tenth to P4.8 billion, while revenues grew by almost a third to P33.7 billion, buoyed by the demand for real estate.
The company did not disclose its fourth-quarter results. The Ayala property unit had managed to hike its nine-month profit by almost a quarter to P3.84 billion. Its total debt rose by two-thirds last year to P16.8 billion.
The company, a builder of residential communities, high-rise apartments, office buildings and upscale malls, said much of its capital spending this year would fund the completion of ongoing real estate projects.
About half the spending will finance residential developments. The company also set aside 17% of its budget this year to boost its stock of land for future developments, 13% for malls, and the rest for corporate business.
Ayala Land spent a record 18.9 billion pesos in capital expenditure last year.
Mr. Ysmael said they would finance the spending by selling receivables and using its P2.4-billion fixed-rate bond. "The company will manage risks by being selective of its projects. [Ayala Land] will more likely focus on Avida Land, the affordable unit of the company," he said.
Ayala Land Spokesman Alfonso D. Reyes noted that while they continue to focus on the middle and affordable markets, launching high-rise projects would be the least of their priorities this year, which they consider risky. Ayala Land, he added, would likely build more subdivisions, which cost less.
He also said there is still growth in the office segment, adding that Ayala land had secured several business process outsourcing sites, which will allow them to pursue projects once the market recovers.
But if the office segment continues to be soft, Mr. Reyes said. The company, however, is managing risks by not being overly aggressive. "We expect the short term to be difficult especially with the supply situation, which is why we have calibrated some of our plans." — Kristine Jane R. Liu
________________________________________________________________________
