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THERE isn’t much one can complain about the way the
Ayala family runs their businesses—banking, telephone, water and
property, except perhaps that they are making much more money than
they deserve. But then, Ayala wouldn’t be Ayala if they made less
money than expected of them—the brothers Jaime Augusto Zobel de
Ayala and Fernando Zobel de Ayala.
JAZA is CEO of Ayala Corp., the
holding company; Fernando is the chief operating officer. JAZA is
the chairman of Globe Telecom and the Bank of the Philippine
Islands. Fernando is the chairman of Ayala Land, the property
subsidiary, and Manila Water.
Globe under Gerardo Ablaza, BPI
under Aurelio Montinola, Ayala Land under Jaime Ayala, and Manila
Water under Antonino Aquino, have for their CEOs non-relative
professional managers, probably the best CEO pool in the country.
In the first nine months of 2007,
the venerable Bank of the Philippine Islands reported profits of
P7.639 billion, up 11.43 percent and the biggest in the industry.
The telephone subsidiary, Globe
Telecom, made P9.69 billion, up just 4.11 percent over the January
to September 2006 net of P9.3 billion. But then, its bigger rival,
PLDT, increased profits by just 2.9 percent despite an 8.46-percent
jump in revenues. Globe also gained market share over PLDT.
Ayala Land, meanwhile, increased
its profits 14.87 percent to P3.12 billion despite a 2.67-percent
drop in revenues to P18.22 billion.
However, the water subsidiary,
Manila Water reported a 3-percent drop in net income to P1.75
billion despite a 14-percent rise in revenues to P5.67 billion, a
10-percent gain in billed volume to 1027 million liters per day,
101-percent collection efficiency, 3.6 percentage point decline in
system loss to 25.2 percent, and a rate increase reflecting
inflation.
The problem is that after nine
years, Manila Water started paying corporate income tax, which in
2007 amounted to 35 percent (of income before tax) or about P900
million. For the whole of 2007, Manila Water expects to show a
slight gain in net profit over its 2006 net income of P2.39 billion.
The holding company, Ayala Corp.
registered a hefty 41-percent increase in nine-month net profits to
P13.55 billion on a 10.7-percent surge in revenues to P58 billion.
That made Ayala Corp. the most
profitable conglomerate and the second most profitable listed
company after PLDT.
Ayala Corp. made P23 of profit
for very P100 of revenue (P13.55 billion profit over P58-billion
revenues).
In 2007, the Bank of the
Philippine Islands lost its preeminent position as the second
largest bank in resources, next to Metrobank.
With total assets of P552.97
billion as of September 2007, BPI lost to Banco de Oro as No. 2.
With resources of P608.45
billion, BDO is now threatening Metrobank for the No. 1 slot. George
SK Ty’s bank has total assets of P664.95 billion.
Still, BPI remains the most
profitable bank this year. In the first nine months of 2007, the
venerable bank reported profits of P7.63 billion, an increase of
11.43 percent or P783 million over the same period in 2006. It
bested the much larger Metrobank, which made only P5.3 billion, up
19.7 percent.
In 2006 and 2005, BPI was also
the most profitable bank with net income of P9.19 billion and P8.55
billion, respectively.
Meanwhile, Globe Telecom has been
gaining steadily on PLDT/Smart in the wireless business. In the
first nine months of September, Globe gained market share with 40.48
percent, up 1.8 percentage points from 38.68 percent in September
2006. The combined market share of PLDT/Smart declined to 59.51
percent from 61.13 percent, down 1.62 percentage points.
Globe’s 1.8 percentage gain
translates to 854,676—the number of cellular subscribers that
should have gone to PLDT/Smart had it kept its September 2006 market
share of 61.13 percent.
In September 2007, Globe had
19.222 million subscribers (40.48 percent) while PLDT/Smart 28.26
million (59.51 percent). In September 2006, Globe had 14.467 million
subscribers (38.68 percent) while PLDT/Smart had 22.929 million
(61.13 percent).
In number of subscribers, Globe
grew 33 percent while PLDT/Smart rose just 23 percent. Globe is
growing 1.43 times in number of subscribers compared with PLDT
despite the latter increasing its ad budget by 40 percent. Globe’s
ad budget rose just 30 percent.
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