Ayala Group scales up 2024 budget to P284 billion

MANILA, Philippines — The Ayala Group is hiking its capital expenditures this year, with its property and energy units poised for higher spending to support their expansion.

Ayala chief financial officer Alberto de Larrazabal said the group’s budget for the year is about P284 billion, 14 percent higher from last year.

“The two groups that will be showing fairly large increases in their capex budget this year will be Ayala Land and ACEN,” De Larrazabal said.

“While most of our bigger business units are able to fund themselves, Ayala is prepared to support its most promising businesses to ensure sustainable growth,” he said.

On the parent level, De Larrazabal said Ayala is looking raise up to P29 billion this year to finance maturing obligations.

“The funding requirement at the parent for this year is about P19 billion and that is really meant just to refinance existing debts. That could go up to P29 billion toward the end of the year as we anticipate another maturity in the first quarter,“ he said.

De Larrazabal said timing would depend on how the markets are behaving.

”But generally, for sure P19 billion this year to finance maturing obligations, possibly another P10 billion toward the last quarter,“ he said.

“We are still looking at options. We'll look at what is the most effective instrument at that point in time. The scales will be different and so which one appeals to a bigger market will define how we move on certain fundraising exercises,“ the official added.

Ayala president and CEO Cezar Consing, meanwhile, said the country's oldest conglomerate has "a constructive outlook for 2024" and is keeping an eye on interest rates and inflation.

Ayala is looking to achieve a core net income of P65 billion by 2026.

“I believe the macroeconomic environment will be quite constructive for core businesses in the next few years,“ Consing said.

For the bank, he said the combination of lower but still healthy net interest margins, good loan growth and digitalization initiatives that are translating to lower costs to serve should add to its bottom line.

“Our real estate business will benefit from increasing urbanization, an amazingly resilient consumption driven economy and the benefits to tourism that comes with increasing infrastructure spending on things like airports and roads,” Consing said.

Consing said the telecom business, on its end, will benefit from lower inflation, increasing demand for connectivity and the growth in relevance of fintech, while the renewable energy business will gain from the huge energy supply gap that frequently accompanies rapid economic growth.

“At the same time, we will be scaling up younger businesses like healthcare and logistics while rationalizing businesses that we believe will not be able to produce sufficient value, earnings and cash flow,“ Consing said.

“All these elements make P65 billion in core earnings by 2026 a not unrealistic objective,” he said.