Ayala Corp. banks on recovery after flat 2009 growth

Ayala Corp. is banking on the economic recovery this year as it reinvests in its existing businesses and explore new investments to grow after posting flat growth last year. “We are pleased with the strong performance and resilience of our core businesses and are confident that we are well-positioned to capture opportunities as the economic cycle turns," Ayala Corp. Chairman and Chief Executive Jaime Augusto Zobel de Ayala said in a statement on Monday. "We are significantly increasing group capital expenditure this year, reinvesting in our existing businesses as well as exploring investments in new sectors where we can lay a platform for a higher growth trajectory moving forward," he added. Net profits of Ayala Corp. barely increased last year as the income of property unit Ayala Land, Inc. took a dive amid a sluggish economy. The listed holding firm’s net profits went up by 0.56 percent to P8.154 billion from P8.108 billion in the prior year. Ayala Corp. partly traced the flat growth to lower capital gains from the sale of shares last year, but excluding this, profits grew by more than third due to the strong performance of major business units. Fernando Zobel de Ayala, Ayala Corp. president and chief operating officer, said the 2009 results indicated a "position of financial strength amid a challenging environment." "Our efforts [in] the past few years to strengthen our balance sheet prepared us well for the economic downturn," he added. Ayala Corp. said its share in the profits of its business units had gone up by almost a fifth to P9.2 billion. Profits of Ayala Land dropped by 16 percent to P4 billion, although the 2008 figure included a one-time gain from the sale of a lot. Excluding this sale, its net income declined by only 2 percent. "In real estate, Ayala Land’s residential sales recovered beginning [in] the second quarter with take-up rates improving through the fourth quarter," Ayala said. Leasing revenues from shopping centers and office and business process outsourcing (BPO) spaces grew by a fifth. Meanwhile, profits of Bank of the Philippine Islands increased by a third to P8.5 billion last year as net interest income went up by a tenth, while other businesses grew by a quarter. "While corporate lending slowed, challenged by the high level of liquidity and the availability of funding through the capital markets, loans to [small firms], consumer market, and credit card customers remained robust, expanding [by] double-digit levels." Telecommunication arm Globe Telecom, Inc.’s net income went up by more than a tenth to P12.6 billion. "While its core mobile business was weighed down by intense competition and subscribers’ increasing preference for value offers on the back of weaker consumption, Globe made significant gains in its broadband business," the firm said. Broadband subscribers expanded three times to more than 715,000, while mobile subscribers reached 23.2 million by yearend. Profits of Manila Water Co., Inc., which serves Metro Manila’s east zone, rose by 16 percent to P3.2 billion given an expanded customer base, increased water consumption and improved operating efficiency. Meanwhile, Integrated Micro-electronics, Inc. posted a turnaround in 2009 with a $10-million net income, erasing the $16-million loss recorded in the prior year. BPO businesses led by LiveIt Solutions, Inc. posted a net loss of $12 million due to acquisitions and debt. "Ayala Corp. ended 2009 with cash of P30 billion and parent net debt to equity ratio of 0.04 to 1," the company said. Shares of Ayala Corp. went up by P7.50 to P300 apiece on yesterday from P292.50 on Friday. — with a report from BusinessWorld