Friday, November 13, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
BY KRISTINE JANE R. LIU, Reporter
UNCERTAIN MARKET conditions during the first part of the year continue to dampen the profits of the country’s largest developer during the nine-month period. Nonetheless, Ayala Land, Inc. said its quarter-on-quarter trend is already showing positive performance.
In a statement sent yesterday, Ayala Land said core profits rose by 9% to P1.05 billion in the third quarter, from P964 million posted in the previous quarter, while revenues reached P8.2 billion from July to September, an increase of 17% from the second quarter.
“This growth was achieved largely through improved [income from operations] and a reduction in general and administrative costs,” the company said.
The growth in third-quarter earnings helped the property firm post a nine-month core net income of P2.9 billion, 8% lower compared with the same period last year. January to September revenues stood at P22.56 billion, 6% lower from last year.
“[The decline] was mostly due to the uncertain market conditions experienced back in the first quarter, a slight year-to-date drop in real estate and hotel operation revenues, and the absence of capital gains from a large transaction, such as the sale of shares in three subsidiaries last year,” Ayala Land said.
Nonetheless, Ayala Land’s Chief Finance Officer Jaime E. Ysmael said the company is maintaining an upward trend both in its revenues and earnings, driven mostly by improved margins and effective cost discipline.
“We have put in place a four-pillar strategy involving growth, margin improvement, capital efficiency, and organizational development, to further strengthen our market position and deliver on investor expectations in the coming years,” Mr. Ysmael said.
Ayala Land said residential development revenues amounted to P10.5 billion from January to September, down by 2% compared with the P10.8 billion posted in the same period last year.
The company said its middle-income brand Alveo Land posted a substantial growth in revenues while the affordable segment brand, Avida Land, performed steadily.
High-end brand Ayala Land Premier’s revenues, however, continue to decline as the recovery in demand in the second and third quarters was not able to fully offset the significant drop in the first quarter.
Meanwhile, revenues from shopping centers climbed by 3% to P3.32 billion during the nine-month period. This was driven by the continued improvement in occupancy rates at Greenbelt 5 and Market! Market!, allowing occupancy rates to remain at the 92% level despite the Ayala Center redevelopment related closures in Glorietta 1 as well as the start-up operations of MarQuee Mall in Angeles, Pampanga, which opened last September.
Revenues from corporate business, on the other hand, more than doubled to P1.33 billion during the period, significantly higher than the P633 million reported last year. The growth was derived from the expansion of its business process outsourcing (BPO) office portfolio, which tripled its gross leasable area from that of last year.
As part of its strategic plan to develop more growth centers around the country, the company recently completed two land bank acquisitions. In August, the company forged a joint venture agreement with the National Housing Authority to develop the 29.1-hectare North Triangle Property in Quezon City into the Philippines’ first transit-oriented, mixed-use central business district.
Last October, the company also signed a 50-year lease agreement with the Subic Bay Metropolitan Authority for the development of a 7.5-hectare property along Rizal Highway within the Subic Bay Freeport Zone into an integrated mixed-use community, which will include a shopping mall, BPO office building and a hotel.
Shares in the company gained 4.34% or P0.50 to P12 yesterday.
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