Property, telco units push Ayala Q1 profit 5% higher

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By Arra B. Francia, Senior Reporter

EARNINGS of Ayala Corp. (AC) increased by five percent in the first quarter of 2019, driven by the strong performance of its property, banking, and telco units, complemented by gains from the merger of its education arm with the Yuchengco group.

In a statement issued Friday, the listed conglomerate said net income attributable to the parent hit P8.03 billion from January to March, as equity earnings contribution of its business units rose seven percent to P9.9 billion.

Globe Telecom, Inc. increased its contribution to the parent by 44%, while Ayala Land, Inc. (ALI) and Bank of the Philippine Islands (BPI) grew their contributions by 15% and five percent, respectively.

“Our first-quarter results show the advantages of a diversified portfolio. The strong performance of Ayala Land, Globe, and BPI offset the challenges from Manila Water’s water supply issues and the market conditions facing AC Industrials,” AC President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.

AC also recognized net accounting gains of P1 billion from AC Education’s merger with iPeople, Inc. It now has a 33.5% stake in the Yuchengco-led company.

Consolidated revenues meanwhile reached P74.34 billion, five percent higher year on year.

ALI expanded its net income by 12% to P7.3 billion for the quarter, on the back of a seven percent in revenues to P39.7 billion. The property developer reported a four percent uptick in revenues from property development to P26.1 billon. The continued strong demand from local and overseas Filipinos also drove sales reservations higher by eight percent to P34.1 billion.

From the commercial leasing side, revenues went up 19% to P9.2 billion after the opening of new malls, offices, hotels, and resorts. The company now has 1.9 million square meters (sq.m.) in total mall gross leasable area (GLA) and 1.1 million sq.m. in office GLA.

BPI’s net income was up eight percent to P6.72 billion, as revenues grew 23.5% to P22.78 billion boosted by the strong performance of its core banking business. Net interest income improved by 29% to P16.1 billion, supported by an 8.8% increase in average asset base.

Globe realized a 44% uptick in net income to P6.7 billion, primarily due to the strong subscriber usage in data-related services from mobile, corporate, and home broadband segments.

Consolidated service revenues of the telco operator added 13% to P36 billion, benefiting from its rollout of its modernized 4G/LTE network which provides customers with faster downloads and web browsing experiences.

Meanwhile, Manila Water’s bottomline was affected by the water shortage in its Manila concession, dropping 27% to P1.2 billion for the quarter. Its operating expenses surged 39% to P2.46 billion due to the penalty imposed by the Metropolitan Waterworks and Sewerage System worth P534 million for “its inability to meet its service obligations to provide 24/7 water supply to its consumers in accordance with the concession agreement.”

AC Energy’s net income also plunged to 99.6% to P2.5 million, against P593 million seen in the same period a year ago. The decline was due to higher interest expenses from its green bond issuance, a lower wind regime, and the scheduled outage of a thermal plant.

The industrial unit was likewise weighed down by general market conditions and recorded a net loss of P332 million.

“The ongoing global market slowdown, startup losses from its newly acquired businesses, and weaker sales of its automotive retail distribution segment pulled AC Industrials’ performance,” the company said.

Shares in AC added 0.11% or P1 to close at P890 each at the stock exchange on Friday.