Ayala Corporation posted a net income of P7.3 billion for the first half of the year, 20 percent higher than its year-ago level. The robust performance of Ayala’s property and banking units, boosted by its increased stake in the latter, primarily drove its strong earnings momentum. Higher earnings of its water unit and improved performance of its business process outsourcing business likewise contributed to Ayala’s profits during the period.
Netting out the impact of the accelerated depreciation as a result of the network modernization of Globe Telecom, Ayala’s core net income grew even higher to P8.9 billion, a 42-percent improvement year on year.
The conglomerate’s strong performance was driven by robust equity earnings which reached P9.5 billion, a 24-percent jump year on year. Ayala’s consolidated revenues likewise increased 21 percent to P74.6 billion.
“The first half broadly turned out as expected as we sustained growth momentum across our key businesses. Our core businesses made great strides in growth and expansion while our international businesses continued to improve. We are confident this strong performance will carry on this year. The encouraging macroeconomic conditions continue to present opportunities for further investment and we will continue to take advantage of these moving forward,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala noted.
REAL ESTATE
Ayala Land, Inc.’s (ALI) net income during the first semester expanded 30 percent to P5.6 billion from a year ago as it sustained its revenue growth across all business segments and achieved stable margins during the period. Its total revenues climbed 36 percent to P36.6 billion driven by the 38-percent jump in real estate revenues. This was primarily a result of higher bookings of residential projects, the sale of office units and commercial lot sales mainly from the Food Terminal, Inc. property which ALI acquired last year.
Revenues from its commercial leasing portfolio rose 17 percent to P8.5 billion in the first half of 2013. Shopping center revenues increased by 10 percent with the addition of gross leasable area (GLA) in ALI’s new malls. Office leasing posted a 13-percent increase, as a result of higher occupied GLA and the escalation of lease rates in its existing facilities. Meanwhile, hotel revenues grew 46 percent and contributed 22 percent of total commercial leasing revenues as the number of rooms doubled and average room rates increased across the board.
BANKING
Bank of the Philippine Islands (BPI) continued to perform strongly in the first half of the year, posting a net income of P12 billion, a 27-percent growth from its year-ago level. This was driven by the 14-percent improvement in the bank’s total revenues coupled with a modest 6-percent increase in operating expenses. The growth in revenues was boosted by higher net interest income, which went up 6 percent and non-interest income, which soared 23 percent from a year ago. Gains across fee-based income, foreign exchange, securities trading and insurance income drove up the non-interest income during the period.
The bank’s loan growth remained strong across all segments, with net loans expanding 17 percent to P564 billion. Lending to corporates went up 18 percent, while consumer loans rose 15 percent. BPI’s asset quality remains strong, with non-performing loan ratio flat at 2.2 percent.
TELECOM
Globe Telecom’s consolidated service revenues for the first half of 2013 rose by 9 percent year-on-year to P44.5 billion, driven by its mobile business, which accounted for 80 percent of revenues. Revenues from the broadband and fixed line data segments also contributed to the growth, collectively making up for 17 percent of revenues.
Globe’s robust revenue growth offset the higher operating expenses, resulting in a 7-percent year-on-year improvement in its earnings before interest taxes depreciation and amortization (EBITDA) to P18.9 billion in the first half.
The impact of the accelerated depreciation charges arising from the ongoing network modernization, however, resulted in a 72-percent decline year on year in reported net income to P1.4 billion. Excluding that, Globe’s core net income actually grew by 13 percent to P6.4 billion.
WATER INFRASTRUCTURE
Manila Water Company, Inc. (MWC) posted a net income of P2.9 billion, 11 percent higher year-on-year on higher billed volume and expanded service connections. Businesses outside the East Zone also continued to contribute during the period. Revenues rose 6 percent to P7.6 billion with contribution from Laguna Water Company surging 52 percent, Boracay Island Water, 21 percent and Clark Water, 5 percent.
Manila Water continues to invest in improving its service to East Zone customers to ensure 24/7 water availability and expand its water and wastewater coverage.
INTERNATIONAL
Integrated Micro-Electronics, Inc. (IMI) registered an 8-percent improvement in revenues to US$350.5 million. This was a result of the robust performance of its operations in Europe, Mexico, and the Philippines, which offset the slowdown in China. Operations in Europe and Mexico grew 37 percent year-on-year, while Philippine operations also posted a healthy 11-percent growth. However, revenues from its China and Singapore operations declined by 9 percent year on year. Lower capacity utilization resulted in a 33 percent decline in net income during the period.
Ayala’s BPO unit, LiveIt, achieved continued growth in revenues and profitability in the first half of 2013. share of revenues reached US$190 million, up 15 percent year-on-year, while share of EBITDA reached US$16.3 million, up 21 percent due primarily to higher revenues and improved profitability at Stream and Affinity Express. Stream reported a 26-percent increase in revenues and a 52-percent increase in EBITDA for the second quarter, due to an 11-percent organic growth and the acquisition of UK-based LBM Holdings Limited, a premier demand and lead generation solutions provider. LiveIt exited the second quarter with share of EBITDA of US$8M, representing the tenth straight quarter of year-on-year growth in share of EBITDA. Further improvement is expected in the second half of 2013 due to organic growth, seasonality and Stream’s acquisition of LBM.
POWER AND INFRASTRUCTURE
With its strong balance sheet and cash position, Ayala remains on track with its investment plan to scale up its power assets and participate in the government’s transport infrastructure-related public private partnership projects.
Its energy unit, AC Energy Holdings, Inc., continued to expand its portfolio. It recently announced its joint venture agreement with UPC Philippines Wind Holdco B.B. and the Philippine Investment Alliance for Infrastructure (PINAI) Fund to develop a wind farm in Ilocos Norte with a capacity of about 81 megawatts. The unit also recently partnered with Power Partners Ltd. for the construction and operation of a 405-megawatt thermal power plant in Kauswagan, Lanao del Norte.
Ayala’s transport infrastructure unit, AC Infrastructure Holdings Corporation, continues to work with various partners to bid for significant size infrastructure projects. It has prequalified to bid for the Light Rail Transit 1 extension and the adjacent automatic fare collection system projects, as well as the Mactan Cebu International Airport.
BALANCE SHEET
Ayala’s balance sheet remained healthy. At the parent level, cash at the end of June amounted to nearly P36 billion, with the debt at close to P70 billion. The conglomerate maintained a comfortable gearing level with net debt to equity ratio of 0.25 to 1. On a consolidated basis, net debt to equity ratio likewise remained comfortable at 0.67 to 1.
This year, Ayala declared a cash dividend of P2.40 per share, 20 percent higher than the regular P2.00 per share payable on August 12, 2013.
The above press statement pertains to the disclosure submitted to the SEC, PSE, and PDEx by Ayala Chief Finance Officer Delfin Gonzalez, Jr.