Ayala profits fall to P26B; sets P196-B capex

Published March 11, 2021, 5:32 PM

by James A. Loyola

Ayala Corporation reported a 16 percent drop in core net income to P26 billion last year as the impact of mobility restrictions weighed down on its various business units.

     In a disclosure to the Philippine Stock Exchange, the firm said core profit excludes the divestment gains from education and power booked in 2019, the impact of the reclassification of Manila Water as asset held under PFRS 5 for both 2019 and 2020, and significant loan loss provisions for Bank of the Philippine Islands.

Ayala recognized a remeasurement loss of P18.1 billion in December 2019 as a result of the reclassification of its investment in Manila Water as asset held under PFRS 5, the accounting standard for assets held for sale.

In 2020, it recognized a partial reversal of the said loss provision in accordance with the accounting standard. 

Including all of these one-off items, Ayala said its reported net income decreased 51 percent to P17.1 billion as its businesses recorded lower net profits due to the effects of the pandemic on operations.

Ayala Land endured the severe impact of COVID-19 to its business operations in 2020, recording a 74 percent drop in net income to P8.7 billion.

BPI’s net income declined 26 percent to P21.4 billion on the back of P28 billion in loan loss provisions it booked in anticipation of an increase in NPL levels.

Globe Telecom’s net income contracted 16 percent to P18.6 billion driven by a moderate decline in gross service revenues, higher depreciation expenses from its continued network investments, and higher non-operating expenses. 

AC Energy recorded a net income of P6.2 billion, a decline from its year-ago level of P24.5 billion, which included gains from the partial divestment of its thermal assets. 

AC Industrials narrowed its net loss to P1.8 billion in 2020 from P2.4 billion the previous year mainly due to improved results of IMI and MT Group as well as lower parent impairment provisions. 

Meanwhile, Ayala said the further easing of quarantine and mobility restrictions sustained its quarter-on-quarter growth. 

Isolating the provisions recognized by various business units during the period and a partial reversal of Manila Water’s remeasurement loss booked in the previous year, Ayala’s core net income grew 46 percent to P6.8 billion in the fourth quarter from the previous quarter.

This was because of Ayala Land posting better performance on higher residential and leasing revenues as operations and construction activities progressed faster with the easing of mobility restrictions.

Also contributing was the stronger results recorded by Manila Water and AC Industrials as well as the better valuation of AC Ventures international fund investments. 

“Our sequential growth in the fourth quarter reflects a recovery in consumer confidence that has started to show in the latter part of 2020. We expect this trajectory to continue and lead to a full economic revival by 2022 as mobility further improves and as the country executes on the vaccination rollout as planned,” Ayala President Fernando Zobel de Ayala said. 

He added that, “This year, the Ayala group will continue to execute on its growth strategy and has allocated P196 billion in capital spending. A continued push for private sector investments would help revitalize the economy.”

Meanwhile, Ayala’s reported net income increased 69 percent on a quarter-on-quarter basis to P5.8 billion, including the effect of the partial reversal on Manila Water’s remeasurement loss and other provisions.