Ayala Corp net profit down 26%

The slowdown in economic activities pulled down Ayala Corp.'s net income by an estimated 26 percent to P1.4 billion during the first quarter of the year compared to P1.9 billion during the same period last year, sources told The STAR yesterday.

The same sources, though said the figure is preliminary as the firm is still in the process of consolidating the financial statements of its various subsidiaries such as Bank of Philippine Islands (BPI), Ayala Land Inc. (ALI), Globe Telecommunications Inc. Pure Foods Corp., Ayala Insurance and Integrated Microelectronics.

The company is expected to release the official earnings figures for the period in the next few weeks, they said.

"For the first quarter, Ayala Corp.'s net profit was estimated at P1.4 billion, which was lower than the same period in 1999," sources revealed.

The drop in its earnings was traced to declines in the incomes of BPI and ALI although these firms remained profitable.

"These companies (BPI and ALI) were hit the hardest by the economic slowdown," they said. "The profits of most subsidiaries are down but still in the black.

BPI and ALI were the biggest contributors to the overall revenues of Ayala Corp., one of the country's biggest conglomerates and the oldest.

While figures from BPI are still being firmed up, sources said its profits declined in the first quarter since the bank has to spend a lot for the merger with Far East Bank & Trust Co. The bank spent more on manpower, particularly on the retirement benefits of redundant employees. The two banks were formally merged middle last month.

But while its profits went down slightly in the first quarter, the outlook for the business house remained favorable. US investment bank Lehman Brothers expects the firm to post a net income of P6.2 billion this year, way above last year's P5.2 billion.

The Ayala Corp. plans to double the capital of its property arm in Singapore, TLB Land from 100 million Singapore dollars (P2.4 billion) to 200 million Singapore dollars (P4.8 billion), to finance the development of several real estate projects in the region, industry sources told The STAR.

At the same time, the name of the company will be changed from TLB Land to Ayala International Holdings Ltd. The proposed capital increase and the change in corporate name would be presented to the company's stockholders for approval during a meeting scheduled on May 20 and 22 in Singapore, they said.

Also subject for approval for its stockholders is the creation of a joint venture with Singapore's Keppel Land for the construction of high-end apartment units in Singapore, they said.

In October last year, Ayala purchased 80 percent of TLB Land, a publicly listed company in Singapore, for $74 million. The general plan, sources said, is to put in all of the firm's foreign assets, mostly real estate properties in Hong Kong and Singapore, in TLB Land. It is expected to be among the firm's biggest sources of revenues in the long-term.

"The firm will use it as a major platform for its regional expansion," they said. "Why Singapore? Because it is showing strong economic recovery along with Hong Kong."

Aside from taking advantage of Singapore's growth, they said the firm would also be able to raise funds at reasonable cost in the island-state.

"It's also a unique platform for Ayala to develop new relationships with other groups that it could work with in Asia particularly in Singapore, Hong Kong, and Tokyo," they said.

Analysts said Ayala's international investments will put it ahead of its competitors.