Value Creation

Outlook & Strategy and Risks & Opportunities

Ayala consistently aims to bridge structural divides and economic gaps in the Philippines by building impactful businesses and transforming these into industry-leading companies. Alongside its purpose of building businesses that enable people to thrive, Ayala aligns its strategy with prevailing global, regional and local trends to properly contextualize its blueprint for sustainable growth.

Learn more about Ayala’s Outlook & Strategy in the 2023 Integrated Report.

Outlook

Ayalas opening with the reopening of the Philippine Economy as they move past the pandemic in 2020

Healthy Philippine economy with a 5.6% GDP growth, ahead of the 4.0% average among its Southeast Asian peers

This was anchored by strong domestic consumption and investment activity amid elevated inflation, higher interest rates and heightened global geopolitical tensions.

Resilient consumer class underpinned by a robust labor market

An unemployment rate of 3.1%, the lowest in two decades, steady growth in remittances and favorable demographics remain supportive of sustained consumer demand.

Accelerated digital transformation and the continuous evolution of new business models such as fintech and electric mobility

Amid intensifying competition, Ayala sees opportunities to evolve its capabilities and further invest in new and innovative businesses that fuel growth and transformation.

Ayalas focus on decarbonization and calls for increased sustainability in business models

Focus on reducing greenhouse gas emissions and calls for increased sustainability in business models

emphasize the integration of environmental, social and governance principles into core business strategies. Ayala aligns with evolving best practices in sustainability as its commitment to take action and contribute to the United Nations Sustainability Development Goals (UN SDGs) and the broader movement towards net zero.

Greater multi-sectoral collaboration among private, government, nongovernment and academic institutions

has become more crucial to unlock innovative and effective solutions to today’s challenges. The flexibility and speed that a collaborative ecosystem can provide are critical to achieving shared goals of a more sustainable and inclusive society.

Strategic Pillars

FOCUSED EXECUTION

Ayala’s strength in execution drives tangible results that contribute to sustained growth and market leadership. With an approach rooted in rigorous planning, efficient use of resources and prudent capital allocation, excellence in execution is critical in achieving its strategic objectives.

KEY INITIATIVES ➤ Financial resilience and growth
➤ Expansion of core businesses
➤ Growth initiatives in emerging businesses
➤ Portfolio rationalization
➤ Balance sheet management
➤ Capital expenditure

BRAND & TRANSFORMATION

Ayala is committed to elevating brands that deliver exceptional quality, with products and services that are nested in understanding and meeting customer needs. Embracing continuous development and innovation, Ayala positions itself both at the heart of the customer experience and at the forefront of a rapidly evolving market.

KEY INITIATIVES ➤ Transformation
➤ Customer centricity
➤ Pioneering new industries

LEADERSHIP IN SUSTAINABILITY

Ayala's commitment to sustainability is anchored on its purpose of building businesses that enable people to thrive. To better understand its impact, the company recently conducted a double materiality assessment, involving key stakeholders to better understand issues that can affect it as well as those to which it can make a meaningful contribution.

In 2021, Ayala committed to achieving net-zero GHG emissions by 2050. It is also exploring bold ambitions under the social dimension of sustainability to ensure positive impact to the broader society. It is an exemplar of good governance, adhering to best practices as it remains a trusted partner by other members of the private sector and government.

KEY INITIATIVES ➤ Net zero commitment
➤ Ayala Sustainability Blueprint
➤ Employee empowerment
➤ Diversity, equity and inclusion
➤ Public-private partnerships
➤ Sustainable Finance

Growth Initiatives in Emerging Businesses

AC Health opened the country's first dedicated cancer hospital in November 2023, the Healthway Cancer Care Hospital. It also expanded its pharma group with the inclusion of St. Joseph Drug and its provider arm through a management agreement of the FEU-Dr. Nicanor Reyes Medical Foundation hospital.

AC Logistics focused on integrating and streamlining AIR21 and Entrego assets while growing its high-value businesses in international freight and cold storage. In June 2023, AC Logistics opened a new cold storage facility in Cagayan de Oro in partnership with Glacier Megafridge.

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Pioneering New Industries

ACMobility is at the forefront of the country's push towards electric vehicles (EVs), accelerating the future of mobility through the distribution of EVs, rollout of critical charging infrastructure, and the delivery of ancillary services. It was appointed as national distributor of BYD, one of the world's largest manufacturer of EVs, in the Philippines. The company also rolled out 20 charging stations across Metro Manila in 2023.

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Risks & Opportunities

Ayala’s risk management program has matured and become more robust that it encourages integrated thinking. This approach guides the alignment of the company’s strategy with risks and opportunities and adds perspective to the strengths and weaknesses of a strategy as conditions change and how well a strategy fits into the organization’s vision and mission. Integrating risks with business objectives provides an effective way for management to ensure how risks can impact strategy and manage them well.

Succeeding the discussion of risks and understanding various external factors affecting Ayala’s operations, the company relied on its management’s foresight and creativity in reviewing and prioritizing its risk exposures.

After the recalibration of Ayala’s strategic pillars and refresh of risk universe, risks were grouped into two categories – (1) risks that impact the company’s three strategic pillars, and (2) fundamental risks common to all – and realigned to the strategic pillars.

Learn more about Ayala’s Risks & Opportunities in the 2023 Integrated Report.

Ayala Group aligning strategy with risks and opportunities from different areas

Business Activities

Ayala constantly seeks out new investment areas, identifies opportunities and assesses emerging markets and economic trends. It conducts a thorough analysis of the performance of a business and weighs it against competition, the business landscape and the ability to deliver value over time. All investment proposals that progress beyond the Strategy, Business Development and Finance groups are presented to the Investment Committee. If approved, the proposal is endorsed to the Finance Committee of the Board.

As we invest, we must also rationalize. In the last decade or so we have ventured into several industries. Given the breadth of our businesses, we are probably the most diversified Philippine conglomerate.

Cezar P. Consing, President & CEO