Globe seen to boost Ayala Corp’s Q4 earnings

Ayala Corp., the largest conglomerate in the Philippines, probably swung to a fourth-quarter profit after buying a bigger stake in its consistently strong mobile phone unit Globe Telecom Inc.

Globe, which accounts for about 45 percent of Ayala’s earnings, is expected to drive a surge in the conglomerate’s earnings this year on an anticipated boom in text messaging and voice calls around general elections on May 10.

"It might have contributed to Ayala’s improvement in the fourth quarter but the full impact will be felt really this year," said Laura Dy-Liacco, stock analyst at ATR Kim Eng Securities. "The major driver in terms of growth is still Globe Telecom."

Ayala, which also owns number two lender Bank of the Philippine Islands and leading property firm Ayala Land Inc., is expected to report a fourth-quarter profit of P631-million, according to Reuters Research.

It suffered a P260-million loss in the final quarter of the previous year when it paid off debt and provided for losses at its Burger King franchise.

The 169-year-old group, which also has interests in car dealerships, information technology and electronics, is due to release its 2003 results on Tuesday.

In November, Ayala raised its holding in Globe to 40 percent from about 32 percent after Germany’s Deutsche Telekom AG sold its stake to cut debt.

Globe trails PLDT

Ayala’s investor relations chief Alfonso Reyes has said he expects the bigger stake in Globe to help group profits in the fourth quarter, a season usually reserved for making provisions for weak businesses.

Globe has a 40-percent share of the lucrative but little penetrated local mobile market, trailing the 57 percent held by the two cellular units of Philippine Long Distance Telephone Co.

For the full-year, analysts expected net profits to rise to P2.83 billion from P2.39 billion in 2002, and to soar to P4.48 billion this year, according to Reuters Research.

But forecasts vary widely. Liacco expects fourth-quarter net profits of P270 million and 2003 net income of P2.47 billion, while Gilbert Lopez, an analyst at ING Equities, expected 2003 profits of P3.37 billion.