Corporate News

By Krista A. M. Montealgre, Senior Reporter

Ayala group earmarks P174B for capex

Posted on March 11, 2016

AYALA CORP. is beefing up its war chest this year to support the growth of its core and new businesses after net profit in 2015 breached the P20-billion mark a year ahead of target, as its diversification to power generation started to bear fruit.

A RESIDENT walks past Alabang Town Center on Feb. 17. -- REUTERS
The Philippines’ oldest conglomerate is setting aside P174 billion in combined capital expenditures (capex) this year -- higher than the P130 billion spent last year -- mainly to support the growth of its real estate and telecommunications subsidiaries, Ayala said in a disclosure to the stock exchange.

At the parent level, Ayala is earmarking P22.4 billion primarily to finance its pipeline of energy projects.

The Ayala group is boosting its spending plan this year after earning P22.28 billion in 2015, a 20% increase from P18.61 billion a year ago to surpass its P20-billion profit goal originally targeted for 2016.

“It was favorable and ahead of our estimates at P20 billion, which was reflected in the share price. The outlook remains steady for the company,” Lexter A. Azurin, head of research at Unicapital Securities, Inc., said in a phone interview.

Shares in Ayala rose P16.50 or 2.24% to close at P754.50 each on Thursday.

The conglomerate rode on the strength of Ayala Land, Inc. and Globe Telecoms, Inc. as well as the contribution of AC Energy Holdings, Inc. to offset the flat results of Bank of the Philippines Islands, Manila Water Co., Inc. and Integrated Micro-Electronics, Inc.

Excluding gains primarily from the partial sale of AC Energy’s stake in North Luzon Renewable Energy Corp. (NLREC) in 2015 and from the divestment of Stream Global Services in the previous year, Ayala’s net income increased 24% year on year.

The growth was achieved on the back of an annual 13% uptick in equity earnings contribution from Ayala’s business units to P28 billion.

Total consolidated revenues climbed 11% year on year to P207.67 billion from P184.28 billion. This included the combined revenues of its subsidiaries and its share in earnings from associates.

Ayala President and Chief Operating Officer Fernando Zobel de Ayala said the conglomerate “achieved a number of milestones” last year, while its major businesses continue to perform well.

“In 2015, we strengthened our growing portfolio of power and infrastructure investments, with various projects coming to fruition. In addition, we increased our investments in social infrastructure, as we entered the health care space and deepened our presence in education.” Mr. Zobel added.

AC Energy contributed a net income of P2.1 billion last year as its power generation assets came online and achieved more efficient operating levels. Likewise, the holding firm booked gains from the partial sale of its interest in NLREC, an 81-megawatt (MW) wind farm in Ilocos Norte.

So far, AC Energy has assembled 600 MW of attributable capacity across conventional and renewable platforms currently in operations and under construction. It expects this capacity to reach close to 1,000 MW this year once the first phase of its 2x660-MW plant in Mariveles, Bataan reaches financial close.

In transport infrastructure, AC Infrastructure Holdings continued to move forward with its public-private partnership projects. AC Infrastructure, through Light Rail Manila Corp., took over the operations of the Light Rail Transit Line 1 last September and has since increased the number of operational light rail vehicles by about 15%.

Its automated fare collection system under AF Payments, Inc. now has over 1.5 million tap-and-go or “beep” cards in circulation today.

Meanwhile, the Muntinlupa-Cavite Expressway started operations last July and is currently serving over 22,000 vehicles per day.