Corporate News

By Krista Angela M. Montealegre, Senior Reporter

Ayala Corp. to make P20B in profit ahead of 2016 target

Posted on March 11, 2015

AYALA CORP., the country’s oldest conglomerate, expects profit to hit the P20-billion mark this year -- sooner than earlier thought -- after reporting healthy earnings results for 2014, it told the stock exchange yesterday.

The company’s net income climbed 46% to P18.6 billion last year, from P12.8 billion in 2013, when it clocked 22% profit growth, its unaudited income statement filed with regulators showed.

Core net profit -- excluding the impact of the accelerated depreciation from its telecom unit’s network transformation initiative in the previous year -- grew 25% in 2014 to maintain a growth pace of above 20% for the past three years.

“As our business units sustain their growth momentum and the overall business environment continues to be encouraging, we are optimistic we can achieve our net income target of P20 billion this year, a year ahead of the plan,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said.

Ayala had targeted to post a net income of P20 billion and a mid-teen return on equity by 2016.

The conglomerate’s performance was anchored on strong equity earnings contribution -- mainly from Ayala Land, Inc., Globe Telecom Inc., and Integrated Micro-Electronics, Inc. -- which grew 42% to P24.9 billion.

Ayala also booked a P1.8-billion one-off gain from the sale of its business process outsourcing asset, Stream Global Services, Inc.
Healthy performance of these core businesses helped offset the flat contributions from Manila Water Co., Inc. and Bank of the Philippine Islands, which was not spared from an industry-wide weakness in trading gains last year.

“There was an outperformance in Ayala Corp. because of the stellar results of property, mobile and electronics manufacturing,” Luis A. Limlingan, business development head at Regina Capital Corp., said in a phone interview.

“The bank was in line with estimates, while water was slightly below expectations.”

Ayala shares jumped 1.23% or P9 to close at P741 apiece yesterday.

The Ayala group has allocated P185 billion in combined capital expenditures this year, primarily to fund the expansion programs of its real estate and telecom units.

At the parent level, Ayala has set a P21-billion capital spending program in 2015 to bankroll its growing pipeline of power generation and transport infrastructure projects, among others.

The conglomerate has forayed into transport infrastructure in recent years, bagging two contracts under the Aquino government’s public-private partnership (PPP) program in 2014 alone: a single ticketing system for Metro Manila’s elevated railways and the extension of Light Rail Transit System Line 1. Its first PPP project is the Daang Hari Connector Road, now called the Muntinlupa-Cavite Expressway.