Ayala Land H1 profits up, but malls, hotels have yet to recover

MANILA, Philippines — Ayala Land Inc. delivered a strong first-half performance this year, but its hotels, malls and resorts continued to grapple with extended pandemic restrictions.

In a disclosure to the stock exchange on Tuesday, the Ayala family’s property unit reported a net income of P6 billion from January to June, up 34% year-on-year. Six-month consolidated revenues, meanwhile, grew 19% on-year to P49 billion.

“Improvement in our performance in the first half of the year was driven primarily by our property development business, with residential demand showing resilience and construction progress driving revenue recognition,” Vincent Dy, company president and chief executive, said.

Breaking down Ayala Land’s financial results, property development revenues went up 37% on-year to P34.1 billion in the first half driven by “construction progress as well as higher sales bookings.” Sales reservations for the period surged 26% annually to P48.2 billion.

However, prolonged lockdowns sapped commercial leasing revenues, which sagged 26% year-on-year to P9.5 billion. Specifically, revenues from Ayala Malls dipped an annualized rate of 43% to P3.4 billion, as shopping centers continue to operate on limited capacity and landlords like Ayala Land offers rent discounts to keep their tenants afloat.

Restrictions on leisure activities also weighed on earnings from the company’s hotels and resorts. Revenues from this segment plummeted 42% year-on-year in the first six months to P1.2 billion, figures showed.

Office leasing revenues, on the other hand, was a bright spot for Ayala Land, posting a “slight improvement” to P4.8 billion after call centers took up spaces vacated by online casinos spooked by a state-initiated crackdown on delinquent taxpayers.

But with the looming lockdown in Metro Manila, Ayala Land’s Dy said the company can weather the brewing storm. Ayala Land’s capital expenditures for the first half hit P32.1 billion, half of which was used to develop residential projects while 12% was spent on land acquisitions.

“While it may take some time for our economy to fully reopen, particularly with the re-imposition of enhanced community quarantine in the National Capital Region, we are proactively launching new projects and ensuring we have adequate inventory to serve market segments that are demonstrating stability,” Dy said.

Shares in Ayala Land shed 0.59% to close at P33.80 each on Tuesday.