Vol. XXII, No. 198 [ BusinessWorld Online ]
Tuesday, May 12, 2009 | MANILA, PHILIPPINES
AYALA LAND, Inc. saw profits down by half during the first three months of the year with the real estate market softening as a result of the economic downturn.
The company however remains confident that the low-end and the middle-income markets will continue to keep it afloat, launching yesterday its first middle-income condominium project for the year.
In a statement yesterday, Ayala Land said net income during the first quarter dropped by 50% to P907 million because of the "decline in overall revenues and margins." Excluding large deals last year, the property developer said net income went down by more than a fifth from last year’s P1.83-billion net income.
"Residential margins contracted as the mix of construction completion as well as new bookings was skewed towards vertical projects, which inherently carry lower margins compared with horizontal developments. Construction margins were affected [also] by an increase in the average cost of construction materials relative to the first quarter last year," the company said.
Revenues declined by a tenth to P7.41 billion from January to March.
Sales of residential projects, the biggest contributor to the company’s total revenues, declined by more than a tenth to P3.13 billion in the first quarter, dragged down by high-end arm Ayala Land Premier.
While revenues from middle-income and affordable brands Alveo Land and Avida Land remained steady, Ayala Land said Ayala Land Premier plunged by 24% because of the sharp drop in new bookings for the quarter.
Ayala Land said there were no bookings of high-end condominium units in the first quarter as the take-up slowed down following market uncertainties last year. Sales of high-end lots declined by more than half to P205 million.
"[The company] sold 29 lots, mostly from Ayala Westgrove Heights and Ayala Greenfield Estates, [last quarter], lower than the 153 lots [it] booked in the first quarter last year. Revenues from leisure project Anvaya Cove also declined by 54% to P93 million as the booked lot sales in Anvaya fell to 31 from 57 in the same period last year," Ayala Land said.
Total revenues from shopping centers meanwhile rose by 6% to P1.1 billion last quarter, driven by the strong performance of the Market! Market! mall in Taguig as well as improved sales among Ayala Center’s "land-lease" tenants. Revenues from office buildings grew by 67% to P455 million in the first quarter, due to the opening of new business process outsourcing facilities.
"We had a challenging first quarter and while we expect the market to remain volatile, our financial condition remains strong as a result of efforts to maintain liquidity and boost our cash position," Jaime E. Ysmael, Ayala Land chief financial officer, said. "We are committed to completing and delivering all of our projects on schedule this year," he added.
The company spent a total of P3.5 billion for project and capital expenditures last quarter, 18% lower than in the same period in 2008. This represents 20% of the full-year capital expenditure budget of P17.4 billion.
Yesterday, Avida Land unveiled its two-tower condominium project in Makati aimed at the middle-income market. The P1.5-billion Avida Towers San Lorenzo will occupy 8,000 square meters and will offer 1,132 units.
Alveo Land will start construction of the 30-storey tower one in August and hopes to turn this over by the first quarter of 2013. Construction of the 26-storey tower two will depend on the take-up of tower one.
Prices range from P1.8 million for a studio unit to P4.7 million for a 52.5-square-meter unit. — Kristine Jane R. Liu
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