The Philippines’ oldest conglomerate, Ayala Corp. (AC), is “optimistic” it net income this year will hit the P20-billion mark as indicated by robust growth in profit and sales last year across its business segments.
AC’s consolidated net income for 2014 jumped 45.3 percent to P18.6 billion from P12.8 billion a year earlier due to strong growth in its property, telecommunications, electronics manufacturing and business process outsourcing (BPO) units.
Excluding the accelerated depreciation from its unit Globe Telecom Inc’s. network upgrades, AC’s core net income climbed by 25 percent to P18.6 billion from P12.8 billion a year ago.
The 25-percent rise in profits met AC’s target to grow its net income by 25 percent to 30 percent annually. The company also said its net income has been growing above 20 percent for the past three years.
“We are very pleased with the performance of our business units as they continue to benefit from the aggressive growth strategy they executed a few years ago. This has, in turn, allowed us to optimize earnings and value at the parent level. We continued to invest in new areas of growth, particularly in power generation and transport infrastructure,” AC President and Chief Operating Officer Fernando Zobel de Ayala said.
“As our business units sustain their growth momentum and the overall business environment continues to be encouraging, we are optimistic we can achieve our net income target of P20 billion this year, a year ahead of the plan,” he added.
For its subsidiaries, property unit Ayala Land Inc. (ALI) recorded a sharp increase of 26 percent in its net income to P14.8 billion from P11.7 billion a year ago—surpassing its target to grow 20 percent annually to P40 billion toward 2020.
Its telecom subsidiary Globe also lists 2014 as its banner year as its net income more than doubled to P13.4 billion from P5 billion a year earlier.
Water utility arm Manila Water Company Inc., on the other hand, was flat, having the same profit flow as 2013 at P5.8 billion.
International presence and diversity pushed profits for AC’s electronics manufacturer Integrated Micro-Electronics Inc. (IMI) to $29.1 million, thrice the size of its $10.5 million net in 2013.
In the BPO sector, LiveIt Investments Ltd. reported a P1.8 billion net gain for parent firm AC mostly due to the divestment of Stream.
Despite robust performance of other units, Bank of the Philippine Islands (BPI) recorded a 4-percent decline in net income to P18 billion on a lack of one-time industry-wide trading gains in 2013.
2015 capex at P185B
For the whole Ayala Group, AC earlier programmed a P185-billion capital expenditure (capex) this year to boost each segment, as well as expansion in the holding firm’s projects in power and transportation sector. The P185-billion capex is 23 percent higher than the actual P150-billion capital spending in 2014.
The bulk of P185 billion will go to ALI (P100 billion), while P37 billion will be for Globe, P21 billion for parent firm AC in its investments in power generation and transport infrastructure, and the rest (P27 billion) for its other subsidiaries Manila Water, BPI, and IMI.
“We started an aggressive growth strategy a few years back and we continue to undertake value enhancing opportunities amidst this sustained momentum in our economy. Each of our business units are seizing investment opportunities within their individual spaces under this positive environment,” AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala earlier said.
“In particular, we continue to strengthen our positions in power and transport infrastructure—two sectors that are presenting opportunities for investments with potential to become new growth platforms for Ayala,” he added.
The parent firm needs $1.6-billion (P71.04-billion) funding for its additional 1,600-megawatt (MW) power capacity targeted to go online by 2018. AC, through its infrastructure unit AC Infrastructure Holdings Corp. (AC Infra), also requires more capital for its Light Rail Transit (LRT) Line 1 Extension project through the joint venture company Light Rail Manila Corp. (LRMC), as well as for the bidding for the Cavite-Laguna Extension project.
LRMC is a tripartite joint venture of AC Infra, Pangilinan-led Metro Pacific Investments Corp., and Macquarie Infrastructure Holdings (Philippines) PTE Ltd. (MIHPL).
Founded in 1834 and incorporated in 1968, AC is the holding company of the Ayala family’s businesses, which include water (Manila Water), telecoms (Globe), property (ALI), semiconductors (IMI), banking (BPI), infrastructure (AC Infra) and BPO and education (LiveIt Investments) among others. It is 50.56-percent owned by Mermac Inc., 10.52-percent by Mitsubishi Corp. and 38.92-percent by the investing public.