Growth Fuelled by Strong Performance of Core Businesses and Turnaround of AC Capital Units

Ayala Corporation’s 2009 unaudited net income reached P8.2 billion at par with prior year’s earnings with substantially lower capital gains from share sales in 2009. Excluding capital gains, net income grew by 34%. The growth was driven by the strong performance of its major business units, even amidst a sluggish economic environment. Ayala’s total equity share in the earnings of its business units rose by 18% to P9.2 billion.

Ayala Corporation president and chief operating officer, Fernando Zobel de Ayala said, “Our efforts the past few years to strengthen our balance sheet prepared us well for the economic downturn. Our healthy cash position and comfortable gearing kept fundamentals intact across the group. This position of financial strength amidst a challenging environment kept our focus on strengthening each of our business units, enhancing our current portfolio, and seeking opportunities for future growth.”

In real estate, Ayala Land’s residential sales recovered beginning the second quarter with take-up rates improving through the fourth quarter. Its leasing revenues from shopping centers and office/BPO spaces grew by 20% with the expansion in gross leasable area and generally steady occupancy rates. Ayala Land posted P4 billion in net income in 2009, 16% lower than prior year which included gains from a lot sale. Excluding the impact of the lot sale, net income was down by only 2%.

The recovery in the residential sector was reaffirmed by two very successful residential project launches in January 2010. Ayala Land is embarking on its most aggressive launch this year as it expands its presence in key cities and areas in the Philippines. The company recently sealed several lease and joint venture agreements with strategic partners for the construction of regional malls in the Subic Bay Freeport Area and Cagayan de Oro. It has opened MarQuee Mall in Pampanga in September last year and will also unveil Abreeza Mall in Davao City by next year.

Its banking unit, Bank of the Philippine Islands (BPI) registered strong business volume, revenue, and earnings growth. Net income was up 33% to P8.5 billion. Net interest income increased by 10% on account of the expansion in asset base and improvement in spreads. Non-interest income grew at an even faster rate of 25%. While corporate lending slowed, challenged by the high level of liquidity and the availability of funding through the capital markets, loans to SME, consumer market, and credit card customers remained robust, expanding at double-digit levels. The bank’s remittance business outpaced industry growth which resulted in BPI capturing over 20% of the overseas Filipino remittance business.

Globe Telecom registered 11% earnings growth to P12.6 billion. While its core mobile business was weighed down by intense competition and subscribers’ increasing preference for value offers on the back of weaker consumption, Globe made significant gains in its broadband business. Globe’s broadband subscribers expanded three-fold to over 715,000, while mobile subscribers reached 23.2 million by year-end following a deliberate churn out of marginal subscribers. Globe continues to invest in its broadband business to augment existing capacity, expand coverage, and improve the availability of 3G, WiMax, and DSL broadband services. Globe recently increased its dividend payout to a range of 75% to 90% of prior year’s earnings as it remains committed to optimizing its capital structure and delivering superior value to its shareholders. In line with this, Globe declared its first semi-annual cash dividend of P40 per common share payable on March 15, 2010.

AC Capital contributed positively in 2009, reversing the loss in 2008. This was driven by the strong earnings growth of water distribution unit, Manila Water Co., Inc., the turnaround of the electronics manufacturing business, Integrated Microelectronics, Inc. (IMI), and the significantly improved performance of Ayala’s holding company for its BPO investments.

Manila Water posted a net income of P3.2 billion, 16% higher than in 2008 as it expanded customer base, increased billed volume, and improved operating efficiency. Manila Water continued to expand its businesses in wastewater management and concessions outside of the east zone. In 2009 the company commissioned the 4–million liter per day Pineda Sewage Treatment Plant, in addition to the five additional sewage treatment facilities currently being constructed in the cities of Makati, Marikina, Quezon, and Taguig. These plants put the company on track to achieve 30% sewerage coverage by 2010. Beyond the east zone, Manila Water commenced the concessions in Laguna and Boracay with plans to improve the system, upgrade the existing network, reduce system losses, and improve reliability of water and wastewater services. Manila Water is also exploring water projects overseas and signed joint venture agreements with REE Corporation in Vietnam and Jindal Water Infrastructure Ltd. of India to explore water and wastewater-related projects in these countries.

IMI posted a turnaround in 2009 with US$10 million in consolidated net income, a reversal of the net loss in 2008. However, with the electronics sector weighed down by the global economic downturn, full year revenues fell by 10% to US$395M. Revenue trends began to improve in the third quarter, with increased volumes for a leading Chinese OEM in the telecom sector, underpinned by 3G network deployments in emerging markets. Philippine revenues were generated mainly from storage device, automotive, and consumer electronics. IMI has a strong balance sheet with consolidated cash of US$54M, strong liquidity, and zero net debt position which gives it sufficient flexibility to support its growth initiatives. IMI is well positioned to capture opportunities as the electronics industry recovers given its solid track record with its OEM customers, global footprint, and robust financial position. It recently completed it listing by way of introduction at the Philippine Stock Exchange in January 2010.

Ayala’s BPO businesses held through LiveIt made considerable gains in achieving both scale and profitability. The merger of eTelecare with Stream in October 2009 created a top 7 global call center company, while Integreon’s acquisitions positioned it as the top global knowledge process outsourcing company. In the fourth quarter of 2009, the BPO companies attained combined annualized run rate revenues of US$911 million and EBITDA of US$77 million, of which LiveIt’s share was US$300 million and US$25 million respectively. LiveIt achieved positive operating net income before deal related charges and interest expense starting in the third quarter, which contributed to a significant reduction in its consolidated net loss to US$12 million in 2009. The loss was largely due to acquisition driven expenses and leverage.

Ayala ended 2009 with cash of P30 billion and parent net debt to equity ratio of 0.04 to 1. It recently announced its intent to bid for the Angat Hydroelectric Plant in early 2010.

Ayala Corporation chairman and CEO, Jaime Augusto Zobel de Ayala, expressed optimism about the strong performance of the Ayala group even amidst a severe global economic slowdown. “We are pleased with the strong performance and resilience of our core businesses and are confident that we are well-positioned to capture opportunities as the economic cycle turns. We are significantly increasing group capital expenditure this year, reinvesting in our existing businesses as well as exploring investments in new sectors where we can lay a platform for a higher growth trajectory moving forward.”

The above statement pertains to the disclosure made to the PSE and SEC by Ayala senior managing director and CFO Rufino Luis T. Manotok on March 8, 2010.


Asiamoney, one of the most widely-read financial magazines in the Asia Pacific region, cited Ayala Corporation as the Overall Best Company in the Philippines for Corporate Governance in its 2009 Corporate Governance Polls.

Ayala also received the highest marks among Philippine companies in two categories, “Best for Responsibilities of Management and Board of Directors” and “Best for Shareholders’ Rights and Equitable Treatment.”

A total of 104 senior executives and research analysts from 96 firms participated in the survey covering more than 250 companies in the region. According to Asiamoney, the latest Corporate Governance Poll was “notable given that the polling period coincided with some of the most pronounced financial volatility in history.”


Never Stop Believing, Ayala’s 175th anniversary program, received the Public Relations Society of the Philippines’ second highest honor, the Bronze Anvil, at the 45th Anvil Awards held on February 26 at EDSA Shangri-La Hotel.

With emphasis on messaging and content, Ayala’s 175th anniversary program made use of multi-media platforms to reach internal and external stakeholders. These include the distinctive “Never Stop Believing” print ad campaign; internal print publications (the Ayala group newsletter Ayala Now and the Ayala at 175 special magazine); an anniversary video featuring chairman emeritus Jaime Zobel de Ayala; a special website and online timeline; animated screensavers; and below-the-line collaterals including banners and exhibits. The 175th anniversary program won an Asian Multimedia Publishing Award in 2009.

Bank of the Philippine Islands’ Herencia, a coffeetable book on its art collection and its supplement teacher’s guide, also received a Bronze Anvil. Ayala at 175, a special publication on Ayala’s history and legacy, was given an Anvil Award of Excellence.

Other Ayala companies figured prominently in the Anvils. Globe Telecom received 4 Excellence and 6 Merit awards for various corporate social responsibility programs. Manila Water received 4 Merit awards for programs in environment and disaster response. Ayala Land’s malls were recognized for unique PR programs: Excellence for Market! Market!‘s Recycliing is in the Bag, and Merit for Cebu Holdings’ Think Pink! health campaign.

Manila Water, Cebu Holdings, and Ayala Foundation also received Merit awards for their annual reports.

PRSP received a total of 292 entries for the 45th Anvil Awards. Winners were selected by an independent board of jurors led by Dr. Cayetano Paderanga, Jr.