By James A. Loyola
Ayala Corporation, the country’s oldest conglomerate, reported that its net income grew five percent to P31.8 billion last year due to the strong earnings of its real estate, telecommunications, and power businesses.
In a disclosure to the Philippine Stock Exchange, Ayala also said it is maintaining its capital spending level and has earmarked P262 billion in combined capital expenditure (capex) for 2019.
The bulk of this amount is allocated to Ayala Land and Globe Telecom, which have set aside P130 billion and P63 billion in capital expenditure for the year, respectively.
Ayala said its performance last year was a result of strong equity earnings contribution from its business units, which reached P39.4 billion, 10 percent higher year-on-year.
This was led by the double-digit growth in equity earnings of Ayala Land, Globe Telecom, and AC Energy.
However, borrowing costs increased as Ayala funded its investments with new debt, moderating its net profits during the period.
“The aggressive growth strategy that we embarked on over a decade ago has been unprecedented for the Ayala group,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said.
He explained that, “over the past 10 years, we spent close to P200 billion in capital expenditure at the parent level alone to support the investment programs of our various business units, including our new growth platforms in power, industrial technologies, infrastructure, education, and healthcare.”
Zobel noted that, “our profitability has also improved steadily over the past 10 years, growing at a compounded annual rate of 15 percent.”
Ayala Land sustained its growth momentum during the year with net income expanding 16 percent to P29.2 billion, primarily driven by the strong performance of its property development and commercial leasing businesses.
Bank of the Philippine Islands reported a net income of P23.1 billion, up 3 percent from the previous year, boosted by the robust growth of its core banking business but tempered by higher provisions and operational spending.
AC Energy’s net earnings expanded 16 percent to P4.1 billion in 2018, largely driven by its domestic thermal and renewable assets as well as higher contribution from its Indonesia investments.
AC Industrials’ net income dropped 53 percent year-on-year to P578 million, largely due to the weaker performance of its automotive businesses and startup losses from newly acquired businesses.
Globe’s net profits reached P18.6 billion while Manila Water recorded a net income of P6.5 billion, 6 percent higher from the previous year.