In its annual stockholders’ meeting held April 18, 2011, Ayala Corporation chairman and chief executive officer Jaime Augusto Zobel de Ayala revealed its group companies are raising capital expenditures to P79 billion in 2011, 21% higher than what it spent in 2010. The bulk of these investments are directed to its domestic businesses, particularly in real estate, telecommunications, water, and banking units as well as new investments in the power and infrastructure sectors.
Zobel said, “The Ayala group is maintaining its focus on its domestic businesses and is looking to maximize growth by broadening customer reach and expanding to new growth centers across the country. The Philippine macro-economic environment has shown positive trends and we intend to participate in a number of the growth opportunities that have emerged.”
Ayala’s businesses have been successful in its traditional markets, which continue to grow and maintain a significant presence. Last year, earnings of its real estate, banking, water, and auto businesses reached new highs, while performance of its telecom business rebounded in the fourth quarter of 2010 posting its highest quarterly service revenues on record.
Zobel pointed out, “Our domestic businesses will continue to be a major source of growth given their compelling market positions, healthy cash flows, high profitability and ability to consistently deliver strong returns to shareholders.” Ayala delivered total shareholder return of 31% in 2010 and consolidated net income of P11.2 billion, up 37% from prior year.
Ayala’s businesses are increasingly tapping customers beyond the mainstream market with product and service innovations that are attuned to this segment. Its real estate unit, Ayala Land, Inc. launched Amaia, a new brand serving the economic housing segment to meet the growing demand for housing at much lower price points. Ayala’s mobile microfinance venture with Bank of the Philippine Islands and Globe Telecom, which is a first in the country, was also launched in 2010 and has since extended P1.1 billion in microfinance loans to 40 microfinance institutions that reach out to 200,000 microfinance customers. Its water unit, Manila Water is reaching out to over 1.6 million customers in low-income sectors under its “Tubig Para Sa Barangay Program”.
Parallel to these, Ayala is eyeing investments in the power and infrastructure sectors. In 2010 Ayala formed a joint venture with long-time partner Mitsubishi Corporation under PhilNewEnergy, Inc. to develop solar power plants in select sites in the Philippines. Early this year, it also acquired a 50% effective stake in Northwind Power Corp. which operates a 33-megawatt wind farm in Bangui, Ilocos Norte, the first wind farm ever established in Southeast Asia. Mr. Zobel envisions Ayala to assemble a portfolio of power assets over the medium-term comprising both renewable and conventional energy sources that balance the cost of energy delivery alongside sustainable practices.
Ayala president and chief operating officer Fernando Zobel de Ayala said, “The company is in an excellent position to invest in sizable projects, without impairing value-enhancing initiatives such as our on-going buy-back program, dividend pay-outs and meeting our funding requirements. We have kept a healthy cash level which as of year-end 2010 amounted to P29B.”
Ayala continues to expand overseas, albeit selectively. Its water unit, Manila Water Company, Inc. recently submitted a bid for a water distribution and non-revenue water reduction project in Bangalore, India. It also continues to explore water projects in Vietnam in partnership with Mitsubishi Corporation. Its electronics business, Integrated Micro-Electronics, Inc. (IMI) opened its sixth manufacturing plant in China and continues to explore acquisitions to build on its current capabilities. Meanwhile, its business process outsourcing unit under LiveIt continues to explore other high growth sectors.
In the same meeting the company’s shareholders approved the declaration of a 20% stock dividend on common shares and an increase in the company’s authorized capital stock from P37 billion to P56 billion as well as the creation of 40 million preferred shares.