Ayala Corp. aims to double 2016 net income to P50B

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Ayala Corp. on Friday intends to double its bottom line at P50 billion in four years, partly by venturing into motorcycle business for export to China.

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Jaime Augusto Zobel de Ayala, the conglomerate’s chairman and chief executive officer, said a five-year plan beginning this year include ramping up net profit to P50 billions or more than double last year’s P22.3 billion.

The “Ayala 2020” plan, intends to improve return on equity at 15 percent from 12.1 percent; expand equity earnings contribution of businesses outside its four largest business units at 20 percent; and widen the conglomerate’s presence in Southeast Asia.

Amid the political changes happening in the country, the group which invested P500 billion in the Philippines over the last five years remains optimistic about the overall environment in the Philippines.

“As part of our 2020 plan, we are upbeat about our investments in new platforms, specifically along three clusters: power and transport infrastructure, healthcare and education, and automotive and manufacturing,” Zobel noted.

The group plans to keep the bulk or 90 percent of its business in the domestic market, with overseas expansion accounting for 10 percent.
Motorcycle manufacturing

The company announced that it has entered into a joint venture with an Austria-based motorcycle manufacturer through subsidiary Integrated Microelectronics Inc.

The group has earmarked almost P600 million, of which $2 million was the initial investment, with P500 million set aside as capital expenditure.

Arthur Tan, IMI president, explained Ayala Corp. would shell out 65 percent of the P500 million capitalization, while 35 percent will be shouldered by KTM AG.

“KTM AG is producing at least 250,000 units annually, while for our part, we intend to produce about 20,000 units a year beginning the third quarter of 2016,” Tan said.

The idea, Tan explained is that the Philippines will be responsible for both the Asean and China markets, since KTM AG has a manufacturing plant in Austria and in India.
“We will export 70 percent of our initial production to China, while the 30 percent will be sold domestically,” Tan noted.

Paolo Borromeo, Ayala Corp.’s strategy and development group head, said the long-term goal is to produce at least 10 percent of the 250,000 annual output of KTM AG.
Borromeo said the joint venture would cater to the middle-income segment in the Philippines and would eventually export to Asean neighbors.

Zobel said the motorcycle production would continue alongside the car manufacturing business.

“We are still deeply engaged in the automotive space. The motorcycle vehicle is pretty new. We are already 40 percent of our business in IMI, and we are very much in the automotive space, while motorcycle is our new project,” Zobel noted.

“Our dream though is to take it from just components to an actual product. We are not giving up. We are looking for full vehicle manufacturing which could either be a four-wheel or a two-wheel,” he added.

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