Last year, the company booked P1.8 billion from the sale of shares of Ayala Land, its property development subsidiary.
AC said it generated substantially less capital gains compared with last year as it felt that equity market conditions have been less ideal in providing an opportunity to realize significant value for its shareholders.
With key subsidiaries and affiliates posting stronger earnings in the first half, the group’s consolidated revenues, however, grew 18 percent to P17.74 billion from P15.01 billion a year earlier.
Cost and expenses where also kept in check as these dropped by 31.4 percent to P15.86 billion from P12.07 billion.
AC managing director Rufino Luis T. Manotok said Globe Telecom was the group’s main revenue driver, contributing 45 percent to total while Bank of the Philippine Islands, the group’s banking unit, contributed 22 percent.
As of end-June this year, AC’s consolidated cash position stood at P16.9 billion or an increase of 49 percent from P11.3 billion in 2002. The company raised $200 million from the issuance of bonds in February which allowed it to pre-fund its liquidity requirements and prepare for possible investment opportunities prior to some expected market uncertainty and volatility arising from the war in Iraq.
The bond, which carries a five-year term and a fixed 8.125-percent coupon, allows the Ayala Corp. company to lengthen its re-pricing window and effectively reduce its medium-term interest rate risk. The company’s debt-to-equity and net debt-to-equity ratios remained comfortable and well within limits at 1.01:1 and 0.69:1, respectively.
As for the group’s property subsidiary, Ayala Land reported a three percent increase in net income for the first semester to P1.1 billion. Leasing operations continued to account for the bulk of the company’s revenues, accounting for 28 percent of total.
BPI posted a net income of P2.6 billion
for the first half of the year, matching last year’s performance for the same period. Significantly, its second quarter performance showed an improving trend as the bank’s net income of P1.3 billion was nine percent higher year-on-year, reversing the relatively weak performance in the first quarter. Revenues for the first semester were lower by eight percent mainly due to the imposition of VAT, which accounted for 59 percent of the revenue drop.
Globe Telecom, meanwhile, reported a 42 percent jump in profits for the first half to P4.4 billion from only P3.1 billion a year ago. This growth was driven by a 24 percent increase in service revenues and an eight percent reduction in operating costs. Increased marketing spending in the face of equally aggressive competition yielded positive results as Globe added 942,460 net new subscribers from January to June of this year, bringing total subscribers to 7.3 million of at end-June.
Significantly, the company increased its market share in the attractive postpaid segment from 72 percent to 74 percent in the second quarter as it grabbed a 91percent share of total net additions in the segment. Globe delivered its impressive financial results despite making a full provision of P895 million for Islacom’s investment in cable system operator C2C Holdings Pte. Ltd., where it continues to hold a 4.25 percent equity stake.
The main operating companies under holding subsidiary AC Capital also delivered solid results in the first half of the year. Manila Water Co. continued with its strong performance in the first quarter as it generated P620 million in net income, doubled last year’s earnings for the same period.
Integrated Microelectronics, Inc., reported P280 million in net income for the semester, an increase of 48 percent year-on-year as its key Japanese customers continued to generate strong outsourcing volumes.
Ayala Automotive Holdings, meanwhile, increased its net income to P245 million, from P160 million in the same six-month period last year, on continued strong sales of Honda cars Phils. Inc. and Isuzu Phils. Corp.
Commenting on the group’s first half performance, Fernando Zobel De Ayala, AC executive managing director said: "The significant improvement in our recurring profitability highlights some very positive trends. Ayala’s key businesses are all performing strongly despite continued difficulties in the operating environment and this underscores the importance of the investments we have made in consolidating and strengthening our competitive positions in these industries. "