Ayala Corp net income up 9% to P4.4 billion in first half

MANILA, Philippines -  Conglomerate Ayala Corp. posted a nine percent rise in net income in the first half this year to P4.4 billion on the continued strong growth of its real estate, banking and water distribution businesses.

In a financial report submitted to securities regulators, Ayala Corp. said equity earnings for January to June 2010 grew 15 percent to P5.7 billion with contributions from Ayala Land and Bank of the Philippine Islands rising 31 percent and 14 percent, respectively. This helped offset the 29 percent decline in equity earnings from Globe Telecom.

Globe Telecom’s net profit plunged to P5.1 billion on lower mobile revenues amid an intense competitive environment. Excluding all forex and mark-to-market charges, as well as one-off gains from last year’s equipment exchange transaction, Globe’s core net income fell 25 percent to P5.2 billion.

The holding firm’s income growth was also boosted by higher equity earnings from AC Capital units totalling P915 million from a meager P77 million a year ago. LiveIt realized a revaluation gain of P2.3 billion during the period which offset the impact of the P1.7-billion impairment provisions undertaken by AG Holdings for its real estate assets in North America.

In the second quarter alone, Ayala Corp. performed strongly with net earnings growing 21 percent. This resulted in a 21 percent jump in equity earnings to P2.3 billion.

Fernando Zobel De Ayala, the holding firm’s president and chief operating officer, said: “The

results in the second quarter reflect a strong rebound from the lows of the recent economic slowdown. Domestic consumption has been robust and benefitted our real estate, banking and auto businesses. Meanwhile, our water distribution business continues to expand and improve efficiencies, while our telecom business faces significant competitive challenges. The fundamental drivers of the local economy remain in place which we believe will continue to fuel the growth of our key businesses. The improved global economic conditions also favorably impacted our electronics manufacturing and business process outsourcing services.”

Property developer ALI chalked in a net income of P2.5 billion from January to June this year, up 34 percent, on the back of a 28 percent hike in revenues owing to robust take up of projects across all its brands.

Earnings of banking arm BPI went up five percent to P5.6 billion on improved double-digit growth in loans and deposits. Total revenues rose four percent with net interest income up by the same rate, mainly as a result of a 12 percent increase in its average asset base.

Manila Water’s net income grew 34 percent to nearly P2 billion due to lower depreciation costs as a result of the renewal of the concession agreement.

The gradual recovery of the global economy has augured well for the electronics industry, resulting in a 11 percent growth in Integrated Microelectronics Inc.’s revenues in the first half as larger orders from its major customers in the storage device, telecom, automotive and consumer electronics picked up, driven by a rise in demand for their products.

Ayala Automotive continued to benefit from the strong growth of the auto industry in the first half of the year with revenues expanding 15 percent to P6.2 billion driven by an increase in the share of its dealership network and the improved performance of its collateral business. This resulted in a net income growth of 80 percent to P172 million.

LiveIt, Ayala’s holding company for its BPO investments, delivered a net profit of P1.6 billion, a turnaround from the P449-million loss in the same period a year ago.

AG Holdings, the group’s vehicle for investments overseas, incurred a loss of P1.8 billion due mainly to impairment provisions for certain real estate assets in North America given the sluggish state of real estate recovery in the US. This allows AG Holdings to focus more on its Asian portfolio which inched up three percent in terms of net asset value during the period.

“The development trends we see in various areas in the Philippines present opportunities for expansion and growth for each of our businesses. We consider our businesses well placed not only to capture these but also to expand their participation in the broader infrastructure space as we seek to contribute as a group to the country’s development agenda,” Ayala Corp. chairman and chief executive officer Jaime Augusto Zobel de Ayala.