Ayala Land profits halved as it earns less from low-margin businesses

MANILA, Philippines - Ayala Land Inc.’s (ALI) first quarter profits plunged by half due to the lack of one-time gains and fewer earnings from its low-margin businesses such as condominiums and construction. Net income dropped 50 percent to P907 million as consolidated revenues declined 10 percent to P7.41 billion, the company said. The decline was mainly attributed to the absence this year of large transactions, particularly last year’s sale of three subsidiaries including Piedmont Property Ventures Inc., Stonehaven Land Inc., and Streamwood Property Inc. which generated P762 million in pre-tax capital gains in March last year. Consolidated net operating income (NOI) reached P1.88 billion in the first quarter of 2009, 14 percent below the year-ago figure. Overall NOI margin likewise went down to 27 percent from 31 percent, mostly on account of the residential business, which was affected because the mix of construction completion and new bookings were skewed towards the low-margin vertical projects. Moreover, margins of its construction business fell after the average cost of construction materials rose during the first quarter last year. “While we expect the market to remain volatile, our financial condition remains strong as a result of efforts to maintain liquidity and boost our cash position," said Jaime E. Ysmael, Ayala Land Chief Financial Officer. During the period, ALI spent a total of P3.5 billion for project and capital expenditures, representing 20 percent of the full year capital expenditure budget of P17.4 billion. - GMANews.TV