Ayala posts 13% income growth

Powered by the robust performance of its telecommunications and real estate units, Ayala Corp. recorded a 13-percent growth in its unaudited consolidated net income to P2.39 billion last year from only P2.1 billion in 2001.

In a statement, Ayala said the improved income was also due to capital gains from sales of shares in its listed subsidiaries and affiliates.

Ayala said it benefitted from a lower interest rate environment and an ongoing debt reduction program as interest and other charges dropped by 30 percent from P6.3 billion to P4.4 billion.

Benchmark rates dropped to historic lows as the average 91-day T-bill rate dropped by nearly 400 basis points, from an average of 9.8 percent in 2001 to 5.8 percent in 2002, significantly lowering the cost of hedging the company’s dollar denominated obligations.

Ayala said general and administrative expenses remained steady, with recurring savings from its reorganization being offset by one-time restructuring costs associated with the special opportunity plan that it offered to employees in the first half of the year.

Despite a prolonged slump in the real estate market, Ayalas property development subsidiary Ayala Land, Inc. generated P2.52 billion in net income, up by 10 percent from the P2.29 billion reported in 2001. Leasing operations, which contributed 27 percent of the P12.23 billion in consolidated revenues, continued to provide stability with Ayala Center and the company’s office buildings each having above market occupancy rates of 92 percent at yearend (MCBD office occupancy rate at year-end 2002 was 85 percent.

In telecommunications, Globe Telecom posted profits of P6.8 billion last year on P45.8 billion in net revenues, 59 percent and 29 percent higher, respectively, than in 2001. The company’s record profitability was achieved despite taking a P2.2 billion asset write-off in the third quarter, which was related to the operational integration of the Globe and Islacom wireless networks.

Wireless subscriber growth remained strong and increased by two million during the year, reaching 6.6 million by end-2002.

In banking, the Bank of the Philippine Islands recorded a net income of P5.2 billion, down by 1.5 percent from the previous year due to the overall decline in the interest rate level and the consequent narrowing of interest rate spreads.

As of end-December last year, Ayala’s consolidated debt stood at P44.8 billion, 13 percent lower than the P51.8 billion at end-2001. The company continued to follow a debt reduction and refinancing program which has brought down debt at the parent level from a peak of nearly $ 1 billion in the fourth quarter of 2000 to the equivalent of $630 million at the end of 2002.

This allowed a further improvement in the company’s consolidated debt-to-equity ratio to 0.89:1, from 1.07:1 the previous year.

Jaime Augusto Zobel de Ayala II, president and chief executive officer of Ayala, said: "Without a doubt 2002 was another challenging year but I am pleased that we have continued to move forward and make steady progress. Our key businesses continue to be profitable and leaders in their respective industries and some of our smaller investments are showing much stronger prospects for the future.