ALI net income jumps 23% to P3.84B in nine months

Property giant Ayala Land Inc. (ALI) reported a 23 percent jump in net profit for the first nine months of the year to P3.84 billion on higher operating revenues and equity earnings and the implementation of cost control measures.

In a financial report filed with the Securities and Exchange Commission, ALI said consolidated revenues reached P24 billion, up 37 percent from P17.56 billion a year earlier.

Operating revenues rose 33 percent to P21.98 billion as the residential, strategic landbank and construction businesses sustained the previous quarter’s gains.

ALI’s Visayas-Mindanao operations chipped in P96 million in revenues, 59 percent higher than the P60 million registered last year.

Equity in net earnings of investees increased 32 percent to P646 million following the favorable performance of the company’s corporate investment vehicles in Bonifacio Global City, Cebu Holdings Inc. and Alabang Commercial Corp.

Higher interest, investment and other income amounted to P1.38 billion, 41 percent higher than the year earlier figure, largely from the sale of shares in three subsidiaries (Piedmont Property Ventures Inc., Stonehaven Land and Streamwood Property) in March this year.

Consolidated net operating income (NOI) likewise grew 11 percent to P6.27 billion.

However, overall NOI margin fell five percentage points to 29 percent following the drop in shopping center margins due to the continued closure of high-margin Glorietta 2 and the start-up operations at Greenbelt 5.

Overhead costs, on the other hand, were kept at bay as general and administrative expenses increased only 14 percent to P1.96 billion.

Residential development accounted for the biggest share of total revenues at 45 percent or P10.7 billion followed by the support businesses at 28 percent or P6.6 billion, largely coming from the construction business.

Shopping centers contributed 13 percent or P3.2 billion while corporate business generated three percent or P633 million. Strategic landbank management also accounted for three percent or P707 million, followed by Visayas-Mindanao with P96 million or less than one percent. Interest and other income accounted for the balance of eight percent.

Revenues from residential development rose 14 percent to P10.7 billion, 14 percent higher than the year earlier figure of P9.4 billion. This was driven by the double-digit growth rates reported by Alveo Land and Avida Land.

Take-up of all residential projects reached 4,164 units as of end-September 2008, slightly lower than the 2,462 units a year ago. The sales value of these units, however, went up five percent to P16.3 billion, reflecting the impact of the price increases.

Revenues from the shopping centers, on the other hand, were flat at P3.2 billion as contributions from Greenbelt 5 and improved performance of Market! Market! were offset by the continued closure of Glorietta 2. Average building rent escalated to P1,160 per square meter per month.

The group’s shopping centers gross leasable area (GLA) is expected to increase by 26,500 square meters by the end of the year with the addition of Glorietta 5’s 9,500 square meters of retail area. Construction of Q Mall in Angeles, Pampanga is ongoing with a target opening of May 2009.

Revenues from corporate business, on the other hand, declined 15 percent to P633 million mainly due to lower lot sales at Laguna Technopark’s expansion phase with only 3.9 hectares sold during the period under review against 6.2 hectares a year earlier.

For BPO buildings, occupancy levels dropped to 83 percent from 100 percent as a result of additional GLA that came on stream. The first five buildings of ALI-UP TechnoHub, totaling 58,459 square meters of GLA, started operations during the period. The sixth building is slated to be operational by yearend.

The hotels group, composed of Hotel InterContinental Manila and Cebu City Marriott Hotel, realized P989 million in revenues, down two percent from the previous year.

As of September this year, ALI has spent a total of P12.2 billion, 14 percent more than the P10.7 billion spent in the same period a year earlier.

ALI is currently reassessing its launch plans for various residential and BPO projects given the changing external environment and does not expect to spend the full amount of P24.3 billion budgeted for the year.