Ayala Land income down to P1.87 billion in first half

MANILA, Philippines - Property giant Ayala Land Inc. (ALI) reported a 35.7 percent drop in net income during the first half of the year on lower revenues from its high-end residential projects and the absence of capital gains.

Based on its financial statements submitted to the Philippine Stock Exchange, ALI said net earnings amounted to P1.87 billion from P2.91 billion a year ago as revenues declined by 6.4 percent to P14.4 billion.

In the second quarter alone, ALI posted a net profit of P964 million, down 10.74 percent from P1.08 billion. Revenues decreased 2.38 percent to   P6.98 billion.

Real estate and hotel operations revenues went down a mere one percent to P13.53 billion as a result of the strong recovery of the residential business in the second quarter. However, the absence of a large transaction this year compared to the sale of shares in three subsidiaries that generated P762 million in pre-tax capital gains in the first half of 2008, continued to account for the bulk of the revenue decline.

Revenues from residential development amounted to P6.85 billion or a two percent decrease from the year earlier level. ALI’s middle-income and affordable brands Alveo and Avida posted growth rates of one percent and four percent, respectively, as a higher percentage of completion on projects under construction offset the decline in new bookings.

Meanwhile, ALI’s upscale residential unit Ayala Land Premier registered an eight percent decline in revenues as the strong recovery in the second quarter was not able to fully offset the drop in bookings in the first quarter.

Total revenues for the shopping centers division, on the other hand, rose five percent to P2.21 billion, driven by the strong performance of Market! Market! as well as the net expansion in gross leasable area from new malls Greenbelt 5 and Glorietta 5.

The combined occupancy rates for all malls remained high at 92 percent,with continued ramp-up in TriNoma, Greenbelt 5 and Glorietta 5.

Revenues from corporate business amounted to P788 million in the first half or an improvement of 84 percent from a year ago as the contribution of new BPO buildings that became operational in the second half of last year and early this year kicked in.

The group’s BPO office portfolio reached a total 216,917 square meters of gross leasable area as of end-June this year, up 158 percent from the previous level. 

Revenues of the Strategic Landbank Management Group nearly doubled to P666 million largely due to the significant completion of its share in booked Nuvali sales.

Equity in net earnings from investees fell 61 percent to P218 million from P556 million as Fort Bonifacio Development Corp. had fewer lot sales this year and Cebu Holdings had no lot sales in Cebu Business Park and Asiatown IT Park.

ALI said its balance sheet remains robust and healthy with significant liquidity for project deliver and possible acquisitions. Cash and cash equivalents stood at P17.5 billion while total borrowings amounted to P18.7 billion versus P16.8 billion as of end-December last year.

Jaime Ysmael, senior vice-president and chief finance officer of ALI, said he expects the company to perform better in the second half banking on renewed consumer spending.

“Indications are positive as buyer confidence is returning and the market has proved resilient. With the current situation stable, we see a clear growth path ahead for Ayala Land in the coming years,” Ysmael said.