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Property unit pulls Ayala earnings

Friday, May 15, 2009 [ manilatimes.net ]

By Chino S. Leyco, Reporter

One of the Philippines’ oldest conglomerates said Thursday that its profits declined in the initial quarter of the year on the back of slower demand on its residential business and absence of one-time gains.

In a report to the Philippine Stock Exchange, Ayala Corp. said the company’s consolidated net income—including capital gains—reached P2.688 billion, 36.7 percent lower than a year ago. Excluding capital gains, the conglomerate’s net income dropped by 18 percent to P2.2 billion year-on-year.

The company said revenues during the period dipped by 3.88 percent to P18.03 billion from a year ago while expenses went up by 2.8 percent to P14.88 billion.

Ayala said its telecom and banking businesses registered double-digit expansions in earnings with sustained business volume growth in its key markets.

The equity earnings from Globe and Bank of the Philippine Islands have expanded by 7 percent and 86 percent, respectively, from the 35- percent and 55-percent decline in the fourth quarter of last year.

Equity earnings from its real estate unit, meanwhile, declined by 51 percent as earnings dipped in the absence of one-time gains and slower demand, particularly in its residential business.

Fernando Zobel de Ayala, the conglomerate’s president and chief operating officer, said the company is pleased to see some degree of resiliency in domestic demand despite the slowdown in the global economy.

“This continues to drive the growth of our core business units. However, consumer confidence continues to be tempered relative to pre-crisis levels, but we expect this to eventually turn as macro economiaxc conditions stabilize moving forward,” Zobel said.

Globe sustained its growth momentum with its net income up by 17 percent to P4 billion while net core income was up 5 percent to P3.7 billion, excluding an after-tax gain of P398 million from an equipment exchange transaction, foreign exchange and mark-to-market gains and losses.

BPI posted P2.9 billion in net income, 86 percent higher year-on-year and 2.6 times more than the net income in fourth quarter 2008.

Ayala’s real estate unit, Ayala Land Inc., posted a net income of P907 million. Excluding gains in the first quarter of 2008, net income was 21 percent lower year-on-year. Its consolidated revenues declined by 10 percent to P7.4 billion.

From its portfolio of companies under AC Capital, Manila Water continued to deliver double-digit earnings growth as its net income went up by 14 percent to P622 million.

Ayala’s export-oriented units—particularly electronics manufacturing and business process outsourcing—faced lower volumes as these are more exposed to the global downturn.

Integrated Microelectronics, Inc.’s (IMI) sales contracted by 26 percent as world demand for electronic products remained muted.

Ayala’s business process outsourcing companies generated $82 million in revenues, 3 percent lower than last year, with operating income—excluding depreciation and amortization—flat year-on-year at $7 million.

Ayala ended the quarter with close to P30 billion in cash and net debt of P8.7 billion.

According to Eric Francia, Ayala Corp. corporate strategy chief, the company may use its available cash to buy back shares, retire extensive debts with yields of more than 10 percent, or increase investments in present units. As for possible acquisitions, Ayala Corp. is “exploring several sectors.”

“We’re not going to let the money to stay there. We’re looking at various investments whether it’s international or domestic. There’s nothing firm yet,” he said.

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