Ayala Group net income down 16% to P9.4 B

MANILA, Philippines - Conglomerate Ayala Corp. (AC) said yesterday its net earnings slid 16 percent last year to P9.4 billion, dragged by lower one-time gains.

At the same time, the Ayala Group announced it has set a P91-billion capital expenditure program this year to bankroll the continued expansion of its subsidiaries. The amount is 38 percent higher than what the group spent in 2011, reflecting their strong confidence in the local economy.

AC ended 2011 on a very strong balance sheet with a cash level of P18 billion.

Bulk of this year’s capital budget will go to real estate projects, network improvement in its telecom unit, acquisitions, as well as investments in its water business.

AC booked only P611 million as extraordinary gains last year compared with P3.6 billion in 2010.

However, excluding the extraordinary gains, AC’s net income climbed 16 percent, mainly driven by the strong growth of its bread-and-butter businesses.

“We are pleased with the solid performance of our core businesses in real estate, banking, telecom, and water. We expect the growth trajectory of our businesses to continue as we aggressively expand our products and services to address the needs of a still largely untapped segment of our population,” Fernando Zobel De Ayala, president and chief operating officer of Ayala, said.

“We also expect our international businesses to improve their profitability moving forward as they benefit from scale following their acquisition initiatives the past years and as they benefit from cost optimization efforts.”

Property unit Ayala Land Inc. recorded an all-time high net income of P7.1 billion, up 31 percent due to strong double-digit revenue growth across all business segments and margin improvements.

Earnings of banking arm Bank of the Philippine Islands likewise reached a record P12.8 billion in 2011, 13 percent higher than the year before on strong net interest income growth and higher net interest margins.

Manila Water Co. likewise posted an all-time high net profit of P4.3 billion or an increase of seven percent due to new connections and improving billed volume.

AC said earnings of its international real estate business turned positive owing to gains realized from the exchange in ownership in Arch Capital and Arch Capital Asian Partners with The Rohatyn Group in the first quarter of last year.

The four investee companies under BPO holding company, LiveIt Investments, chalked in revenues of $1 billion, of which LiveIt’s share was $318 million, up 16 percent from the prior year.

The weak global economic environment, however, affected Integrated Micro-Electronics Inc.’s bottom line, resulting in a 30 percent decline.

To ensure a more stable platform for continuous growth, the conglomerate has entered the power and transport infrastructure space, committing P7 billion in capital for the development of projects in solar, wind, hydro and thermal power generation.

AC likewise bagged the P2-billion Daang Hari-South Luzon Expressway link road, the very first Public-Private Partnership (PPP) project of the Aquino administration.

The project entails the construction of a four-lane four-kilometer road that will link Daang Hari road in Cavite to the South Luzon Expressway.

The conglomerate is looking at other projects to be offered under the PPP program, particularly railroad and airport-related projects.