Ayala profits rebound but still below pre-pandemic levels

MANILA, Philippines – Conglomerate Ayala Corp. posted a double-digit profits growth in the first half, but its financial strength is not yet back to pre-pandemic level.

In a disclosure to the Philippine Stock Exchange on Thursday, the holding firm of the Ayala family reported that net income jumped 31% year-on-year to P10.4 billion. But the company said the dramatic growth was due to “low base” from last year, when the pandemic tarnished its balance sheet.

Despite the superlative profits growth, earnings have yet to reclaim its vigor. Ayala’s net income in the first half of the year was significantly lower than its bottom line in the same period in 2019, which stood at P37.83 billion.

Excluding extraordinary financial events, Ayala said its six-month core net income went down 8% year-on-year to P13.3 billion, which was nevertheless equivalent to 90% of pre-crisis level. Fernando Zobel de Ayala, company president and chief executive, is cautiously optimistic.

“Our first semester results show recovery in the business environment compared to last year,” Zobel said. “However, increasing infections from the Delta variant present new challenges.”

Financial results showed Ayala’s revenues grew 24% annually to P122 billion in the first half, as growth in its property, telecommunications, power and industrial businesses offset a decline in its banking unit’s topline.

Breaking down the conglomerate’s segments, Ayala Land revenues surged 19% year-on-year to P49 billion propelled by continued construction progress and higher bookings from property development, while commercial leasing operations were weighed down by renewed restrictions.

Its telecommunication venture, Globe Telecom Inc., saw revenues climb 4% year-on-year to P75.5 billion, as work-from-home setups become more popular while students shift to online classes.

Likewise, revenues of Ayala’s power segment, AC Energy Corp., expanded 35% on-year to P13.4 billion as demand for electricity returned to pre-pandemic level. Loosening restrictions, meanwhile, pushed up AC Industrials’ topline at an annual rate of 32% to P40.7 billion.

Bucking the uptrend was Ayala’s banking business. Muted loan demand sent revenues of Bank of the Philippine Islands falling 4% year-on-year to P48.1 billion, figures showed.

“As a business group operating in diversified industries, we will continue to do our part in helping revitalize the economy through continued investments and supporting the country’s pandemic response and vaccination program,” Zobel said.

Shares in Ayala lost 2.42% to close at P727 each on Thursday.