In a statement, Ayala said its ongoing debt reduction program contributed to the company’s positive performance as it has brought down its debt-to-equity ratio to an estimated 0.92:1, from 1.07:1 at year-end 2001.
After retiring $161 million in loans last November, the company paid off in advance an additional $89 million in the last quarter. For the next five years, the company expects its debt level to be pared down from $500 million to $300 million.
At end-2001, the conglomerate had consolidated borrowings of P52 billion, 77 percent of which is dollar-denominated. These dollar exposures are hedged or covered either by cross-currency swaps or forward purchases of US dollars, which Ayala resorted to protect its forex position during the time peso was at a volatile stage.
This year, Ayala officials said they expect net earnings to be substantially higher than in the past year as the company embarks on a focused strategy of debt reduction, asset rationalization and prudent spending program.
"If 2002 continues to progress on its current trajectory, then we expect to record stronger results for the full year," Ayala Corp. president and CEO Jaime Augusto Zobel de Ayala said.
He said over the last few years, the holding company used its balance sheet to consolidate the group’s telecommunications and banking businesses into positions of clear market leadership. "While this has resulted in some short-term stress volatility in Ayala’s earnings, we now face a largely positive environment where we can begin reaping the fruits of our investments," Zobel de Ayala said.
Even with the sale last year of food processor Purefoods Corp. to San Miguel, Ayala still boasts of a formidable stable of businesses considered as leaders in their respective fields: Ayala Land Inc., Globe Telecom and Bank of the Philippine Islands.
Its real estate flagship ALI reported slightly lower income of P500 million during the traditionally weak first quarter but expects a recovery for the remainder of the year with a string of new and expansion projects scheduled to be launched.
Its banking arm, Bank of the Philippine Islands (BPI), registered a consolidated net income of P1.48 billion, which was 31 percent lower than a year earlier due to the steep decline in interest rates, resulting in lower interest margins.
Its strongest growth driver was Globe Telecom, whose P1.42-billion net income surged 33 percent over the same period last year. The mobile phone leader has increased its subscriber base by 71 percent to breach the five-million mark. The company said it will continue to support the growth of its customers with a P5.2 billion capital expenditure budget for further infrastructure investments this year.
The holding company will be spending the bulk of its P40-billion capital expenditure allocation on the expansion of Globe’s network infrastructure, on top of the strategic repositioning of its new business unit, AC capital – considered as "the most important single change" in the conglomerate’s structure.
AC Capital will take over the responsibility and management of Ayala’s other businesses (except BPI, Globe, ALI and its foreign arm Ayala International) as a portfolio and be in charge with finding new and creative ways for Ayala to create more value from each of these businesses.
The new unit will take over the other Ayala subsidiaries and affiliates such as Manila Water, Integrated Microelectronics, iAyala, the automotive manufacturers Honda and Isuzu, and other non-core assets whose combined book value amount to roughly $200 million.