Ayala Corporation posted P5.0 billion in net profits in the first quarter of the year, driven by sustained positive momentum in its real estate, banking, telecom, and electronics manufacturing businesses, while new businesses, particularly in power generation, have moved to execution phase. Without the effect of the P1.8 billion divestment gains from its business process outsourcing unit in 2014, Ayala’s first quarter earnings grew 39 percent. With the divestment gain considered, net profit declined 8 percent. Ayala’s positive earnings momentum in the first quarter is further reflected in the 11 percent sequential growth from the strong fourth quarter results in 2014.
The overall strong performance of Ayala’s business units in the first three months of the year contributed a total of P6.4 billion in equity earnings, 27 percent higher year on year. Compared to net income inclusive of the net divestment gain in the same period last year, equity earnings declined 7 percent in the first quarter of the year.
“We continue to be encouraged by the strong performance of the businesses across the group. We remain optimistic that we can sustain the strong first quarter results throughout the rest of the year, and stay on track to meet our strategic goals and financial targets,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said.
Real Estate
Most of Ayala’s core businesses reported double-digit earnings growth year on year in the first quarter. Its real estate unit, Ayala Land, reported a 19 percent growth in net earnings to P4.1 billion, boosted by a 13 percent growth in real estate revenues. Recurring income for the first quarter comprised 44 percent of net income, driven by the steady performance of its malls, offices, and hotels and resorts.
Banking
In banking, Bank of the Philippine Islands’ net income climbed 36% to P4.9 billion from the same period last year. Net interest income grew by 15% year on year due to an expansion in average asset base. Non-interest income rose by 23% during the period mainly from higher securities trading gains. Core banking business remained strong, with customer loans up by 14%, while deposits grew by 17% year on year.
Telecommunications
In telecommunications, Globe Telecom’s bottomline grew very significantly by 43 percent over the same period last year to P4.2 billion. Gross service revenues increased by 13 percent driven by growth in data revenues across all major service lines. EBITDA margin increased to 42 percent from 38 percent in the previous year.
Electronics Manufacturing Services
In electronics manufacturing services, Integrated Microelectronics Inc.’s earnings increased 27 percent to P288 million vis-à-vis its first quarter last year despite foreign exchange challenges, on the back of better margins on realized cost savings and productivity. Net income margin increased by 94 basis points to 3.4 percent, mainly due to lower direct labor costs and administrative expenses year on year.
Water Infrastructure
The strong performance of these units counterbalanced results from the remaining businesses in the portfolio. In water, Manila Water Company, Inc. reported flat net income at P1.4 billion, with stronger billed volume levels offsetting higher operating expenses. Non-East Zone businesses accounted for 15 percent of total net income for the period.
Power Generation
Ayala’s recent investments in power have come into fruition and started operations. In April, AC Energy Holdings, Inc. secured the Feed-in-Tariff for the 81 megawatt windfarm of the North Luzon Renewable Energy Company and the 19 megawatt expansion of Northwind Power Development Corp. In addition, AC Energy commenced commercial operations for the first 135 megawatt unit of South Luzon Thermal Energy Corp. in April.
Balance Sheet
Ayala’s balance sheet remains healthy. As of March 31, 2015, parent company cash reached nearly P43 billion, putting its net debt-to-equity ratio at 0.23 to 1 at the parent level and 0.76 to 1 at the consolidated level.