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By Likha C. Cuevas-Miel
Reporter
AMID the volatility in financial
markets worldwide and a slowdown
in the US economy, the information technology arm of the Ayala group
said expansion may have to wait for at least another year.
In an interview, Arthur Tan,
Integrated Microelectronics Inc. (IMI) president and chief
executive, said the company may acquire firms within Asia Pacific
but financial closure may take two years.
“I don’t think the
transaction will happen this year. It’s the timing. We’re
already three months in a year and if you do a due diligence
process, funding process—all of these, the transactions will
happen early 2009,” he told The Manila Times.
The target companies are in the
combined engineering and manufacturing businesses with a market
capitalization ranging from $50 million to $200 million. Tan said
engineering firms tend to have a smaller capitalization than
manufacturing companies.
Last year, IMI’s net income
rose 3 percent to $36 million as revenues improved by 8 percent to
$422 million. Revenues from Philippine operations were up by 13
percent and contributed more than half of the total, while revenues
from China and Singapore operations inched up by 1 percent.
As an exporter, IMI has been hit
by the stronger peso vis-à-vis the dollar. The company earlier said
the local currency’s strength affects direct labor and overhead
expenses and other spending related to technology integration,
pulling down operating income.
This is one reason why the
company plans to expand its customer, industry, and geographic
portfolio and move into higher margin industries.
“We do hedging on the financial
side and on the operational side we have to figure out how to
optimize the support functions around the rest of the region; some
of the activities that we do or we could do in China (or) all those
we could optimize and consolidate in the Philippines and save on
that. It’s really cost containment,” Tan said.
IMI’s parent announced last
week that it expects slower growth this year and that it may be
unable to achieve the same record growth Ayala Corp. and its
subsidiaries achieved last year due to the sudden shift in sentiment
and economic situation worldwide.
Last year, the holding firm’s
profits rose by 33 percent to P16.2 billion, driven by the strong
performance of its major operating units. The group’s consolidated
net income grew at a compounded annual growth rate of 37 percent
over the past six years with return on equity reaching its highest
at 19.7 percent last year.
Despite the slowdown, the Ayala
group is stepping up its investments “to continue to pursue
potential areas for growth in tandem with the holding company’s
efforts to seek new investment opportunities,” Ayala Corp said.
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