Ayala Corporation reported first nine months’ net income of PhP 7.3 billion, 7% higher than earnings in the same period last year. The growth was primarily driven by its property business and the sustained momentum of its banking and telecom businesses. Altogether, equity earnings from these core units increased by 9%. This was, however, tempered by lower equity earnings from the electronics, BPO, and Auto businesses and put total equity earnings during the period to P9.2 billion, up 8% year-on-year.
Ayala ended the period with a healthy cash level of PhP 26 billion and net debt of PhP 23 billion, keeping net debt to equity at 22%. The company continues to pursue initiatives in the power and transport infrastructure sectors. Recently, its joint venture company under South Luzon Thermal Energy Corp. (SLTEC) announced that it was able to obtain a PhP 9 billion project finance loan for the construction and operation of its 135-MW thermal plant in Calaca, Batangas. Ayala was also pre-qualified by the Department of Public Works and Highways (DPWH) to bid for the Daang Hari – SLEX Link Road Project. The project will involve a 26-year operations and maintenance concession period. The submission of bids and award of the project is scheduled for the end of 2011.
Ayala Corporation president and COO Fernando Zobel de Ayala said, “The favorable domestic economic environment and the continued robust local consumption have underpinned the growth of our core businesses. We continue to take advantage of this momentum as we constantly develop and redefine our products and services in order to meet the diverse needs of our broadening customer base.”
REAL ESTATE
Ayala Land’s net income surged by 33% to a nine-month high of PhP 5.2 billion on the back of strong revenue growth across key business lines. Revenues from residential property development grew by 27% as a result of steady project completion and strong bookings. Ayala Land’s aggressive expansion saw residential unit launches reaching 10,045 at the end of the first nine months, with an estimated value of PhP 34 billion and nearly equivalent to full year launches in 2010. Its revenues from shopping centers grew steadily by 6% while office building revenues rose by 20% as occupied gross leasable area (GLA) and leased-out rate in its BPO portfolio improved significantly. Higher revenues combined with further improvement in operating efficiency and effective management of costs translated to an improvement in overall margins. Operating income improved by around 30% compared to the same period last year.
BANKING
Bank of the Philippine Islands’ nine-month net income reached PhP 9.6 billion, up by 6% year-on-year. Total revenues were 7% higher than the same period last year, driven by a 9% increase in net interest income. Net interest income growth was boosted by a PhP 67 billion increase in average asset base, while net interest margins remained stable. Loan growth was healthy at 22% year-on-year. Growth was broad-based across all market segments with top-tier corporate, middle market, SMEs, and consumer loans posting double-digit expansions. Despite the strong loan growth, asset quality remains better than industry as 30-day nonperforming loan ratio improved further to 2.3%. In the meantime, non-interest income was just slightly ahead of the previous year as securities trading gain fell short by P809 million from last year as expected. This was, however, more than compensated for by higher fees and commissions, income from insurance operations, and other operating income. The bank’s total intermediated funds increased by 20% to P1.3 trillion, coming mainly from a 44% growth in assets under management. Return on equity reached 15.5%.
TELECOM
Globe continued its strong momentum and reported nine-month net income of nearly P8 billion, 7% higher year-on-year. The company delivered record service revenues in the third quarter, which put nine-month consolidated service revenues at nearly P50 billion, 9% higher than same period last year. This was driven by the continued rise in domestic voice, SMS, mobile data services, and the growth in internet browsing activity. Globe’s mobile service subscribers grew by as much as 15% to 29.1 million while broadband service subscribers surged by 36% to 1.4 million. The strong take-up for the Company’s customizable postpaid plans, innovative all-network offers, and unlimited voice and SMS promos were key contributors to the company’s strong performance. EBITDA margins were maintained at 54% as strong revenue growth cushioned the impact of higher operating expenses. Network-related expenses also rose to support an expanded mobile and broadband network. Excluding foreign exchange and mark-to-market gains and losses, Globe’s core net income increased by 15% from last year’s P7.1 billion to P8.2 billion this period.
WATER
Ayala’s water business generated total operating revenues of PhP 8.9 billion, a 7% increase on the back of the approved adjustments in tariff for the year in the East Zone, and a 19% growth in revenues from its new businesses. The company’s core net income increased by 13% to PhP3.3 billion, while net income rose by 5% to PhP 3.1 billion, which includes the mark-to-market loss on its PhP 4 billion bond. Billed volume in the East Zone grew marginally during the period due to the residual effect of the prolonged rainy weather and ongoing water conservation measures. However, this was partly mitigated by additional sales from new service connections in the East Zone. The number of service connections in platform and expansion areas in the concession zone increased by 4% with over 30,000 new connections. In the meantime, billed volume in its new concessions in Laguna and Boracay, posted 18% and 20% growth, respectively, and also added new connections. These will be catalysts for increased volume sales looking forward alongside its continued expansion in new areas across the country. Manila Water recently announced it signed a Sale and Purchase Agreement to acquire 100% of Clark Water Corporation which is the concessionaire for the Clark Freeport Economic Zone.
AUTO
Ayala’s automotive dealerships were impacted by supply problems in the aftermath of the calamities in Japan last March. As a result, revenues declined by 20% to PhP 7.2 billion primarily due to lower vehicle sales. Net income slowed to PhP 76 million, 69% below earnings posted during the same period last year. The Ayala dealerships though continued to lead both Isuzu and Honda networks given its 32% and 47% market share, respectively. Recent flooding in Thailand where Honda units are assembled will create supply disruptions in many Asian markets.
ELECTRONICS
Integrated Microelectronics, Inc.’s (IMI) generated year-to-date sales of US$ 420 million, 43% better than last year, inclusive of the impact of its recent acquisitions. Its China business grew by 16%, mainly driven by increased turnkey business from major customers. IMI’s revenues from its Philippine operations increased by 9% versus the same period last year. Sales from IMI Europe reached US$ 25.7 million covering months of August and September. Year-to-date net income was US$ 1.6 million which includes US$2.3 million in forex gain and other income. Net income level was 67% lower compared to last year as a result of higher direct labor and materials cost.
BUSINESS PROCESS OUTSOURCING
The investee companies of LiveIt achieved healthy revenue and EBITDA growth. Combined revenues were US$ 736 million for year to date September, 12% higher than last year due to the growth of client volumes across all investees. Greater scale and cost efficiencies resulted in LiveIt’s share of EBITDA rising by 42% to US$ 16 million, and operating net income reaching US$ 0.4 million during the period. LiveIt however reported a net loss of US$ 19 million after taking into account financing and non-operating expenses.