Ayala Corp to invest P49 billion this year amid global crisis

MANILA, Philippines - Business conglomerate Ayala Corp. said it is prepared to ride out the global economic downturn with a planned capital investment of P49 billion this year.

During the company’s annual stockholders’ meeting, AC chairman and chief executive officer Jaime Augusto Zobel de Ayala II said that while 2009 promises to be even more challenging than last year, the group remains cautiously optimistic about its growth prospects. 

Zobel de Ayala said the programmed capital budget will continue to build a base for the group’s growth trajectory in the medium to long term. “We believe there are opportunities that can be realized that will strengthen the foundation for our sustained growth,” he said.

For his part, AC president and chief operating officer Fernando Zobel de Aya-la said while the allotted budget is lower than P55.46 billion spent last year, the amount is still significant given the unfolding global economic challenges.

He said the solid market and financial condition of each of the group’s operating units will allow them to take advantage of opportunities in time for the next wave of growth when the economic cycle turns.

About P17.4 billion or 35 percent of this year’s capex will go to real estate development projects, 33 percent will be

chanelled to the continued expansion of the group’s telecommunications business and 23 percent for the improvement of its water distribution services.

AC chief finance officer Rufino Luis T. Manotok said there will be minimal fund-raising activities for this year as majority of the group’s cash requirements is already covered.

Last year, AC and its subsidiaries raised a combined P23 billion in cash at the height of the tightness in credit markets, giving it more than enough liquidity to pursue its growth plans this year. Of this amount, P6 billion was raised by AC through a preferred share offering last November which, combined with other fund-raising actitivities, generated close to P10 billion in fresh capital for debt repayment and new investments.

By end-2008, AC had cash of P25 billion after prepaying $60 million in debt, 

While demand for consumer electronics is expected to remain soft this year, AC remains bullish on the long-term prospects of the industry with subsidiary IMI continuously on the lookout to expand its business as more applications for electronics in the automotive, medical and industrial industries emerge.

The group also continues to believe in the growth potential of the business process outsourcing business. “While growth may slow in the short-term, we expect it to accelerate in the medium to long-term as companies find the cost advantage of outsourcing, particularly to the Philippines, to become more compelling,” Zobel De Ayala said.

The domestic BPO sector has grown to a $6 billion revenue generating industry in less than a decade and the country is now well positioned to be a leading destination next to India for English voice-based work and other high value-added business processing services.

Aside from these, the group remains on the lookout for investment opportunities in other industries which it did not identify.