Global crisis eats up on Ayala Land's 2009 sales, profits

Net profits of Ayala Land, Inc. rose by almost a fifth to P1.12 billion in the last quarter — reflecting increased demand amid the slow global economic recovery — but this was not enough to swing the property developer out of a dull performance for the full year. Ayala Corp.'s realty arm posted net earnings of P4.68 billion for 2009, 13 percent lower than in the prior year, as the global crisis ate up on sales, which slid by a tenth to P30.46 billion, the company's financial statement showed. "The [revenue] decline was accounted for mostly by the 8-percent drop in revenues from real estate and hotel operations and the absence of capital gains from a large transaction, specifically the sale of the Valero lots in March 2008," Ayala Land said in statement on Thursday. The company traced the revenue drop in realty and hotel operations to its decision to cut external third-party construction contracts. Consolidated sales from its core residential and leasing operations were also flat. Jaime E. Ysmael, Ayala Land senior vice-president and chief finance officer said the firm's balance sheet continues to be robust "with a close to zero net-debt position and significant capacity to take on additional borrowings to support its aggressive growth plans for the next few years." "In order to support its expansion plans, the company intends to continue ramping up its borrowing program in 2010," he added. Ayala Land's cash stood at P15.52 billion, while borrowings at the end of last year stood at 18.81 billion, P2.06 billion higher than a year earlier. The company spent P16.24 billion last year, 14 percent less than in the prior year. Residential development accounted for 60 percent of the total, followed by land bank management with 17 percent and shopping centers and corporate business each with 8 percent. "For 2010, the company has earmarked a new record of P27.17 billion for [capital expenditure] as it expects its most aggressive year with record product launches and activity levels across all product segments," Ayala Land said. The company said revenues from residential development reached P14.23 billion last year, 6 percent lower than in the prior year, as combined bookings for three brands dipped due to uncertain market conditions in the first quarter, as well as a limited supply of product launches. Ayala Land Premier sales slid by 15 percent to P6.53 billion, while Alveo Land and Avida Land both posted 2-percent growth. Meanwhile, revenues from shopping centers rose by 4 percent to P4.44 billion with the opening of MarQuee Mall in Angeles City, Pampanga last September. "Blended occupancy rates remained at 92 percent despite the Ayala Center redevelopment-related closures in Glorietta 1, as well as the start-up operations of MarQuee Mall," the company said. Ayala Land said revenues from its corporate business doubled to P1.99 billion last year, largely due to the expansion of its business process outsourcing (BPO) office portfolio, which reached 178,160 squares meters of leased space by yearend. Revenues were also boosted by higher average BPO lease rates that went up by more than a fifth to an average of P582 per square meter per month with the start of operations of two higher-yielding BPO office buildings in Makati — Solaris One and Glorietta 5 BPO. Meanwhile, revenues from Ayala Land's land bank management group went up by almost a quarter to P2.26 billion after it completed a significant portion of booked NUVALI residential and commercial lot sales in Canlubang, Laguna. On the other hand, revenues from construction, property management and hotels dove by 38 percent to P4.96 billion. Total expenses dropped by almost a tenth to P26.42 billion. Cost of sales from real estate and hotels, which accounted for the bulk at P19.04 billion, slipped by more than a tenth, reflecting company efforts to cut costs. — Norman P. Aquino, GMANews.TV