Ayala Corp profits up by nearly half

REPORT FROM BUSINESSWORLD Ayala Corp., the country’s largest conglomerate, posted an audited consolidated net income of P12.2 billion in 2006, a record performance boosted by strong earnings of its operating units as well as gains from asset sales. In a filing with the Securities and Exchange Commission (SEC), the company said its 2006 earnings were 49% higher than 2005’s P8.2 billion. "At the holding company level, equity earnings grew by 12% to P12.3 billion as all key businesses posted significant earnings growth. Earnings were further enhanced by capital gains of P4.7 billion from the sale of shares in Ayala Land, Inc., Bank of the Philippine Islands (BPI), and Globe Telecoms, Inc.," the firm said. Consolidated sales and services rose by 54% to P53.4 billion, which the company traced to Ayala Land’s increased land and condominium sales buoyed by strong demand for residential projects across all market segments. Commercial center operations also contributed to strong revenue growth due to higher basic rent, the full operation of Phase 1B of the Market! Market! mall in Fort Bonifacio and higher occupancy rates. Ayala’s electronics arm, Integrated Microelectronics, Inc., doubled its revenues last year, reflecting the impact of the acquisition of Speedy Tech as well as organic growth. Auto dealership sales were also up 24% year-on-year. Equity in net earnings of associates and joint ventures was relatively flat in 2006 at P8.3 billion as 2005 included gains from the initial public offering of Manila Water, Inc. "This primarily reflects Ayala’s share in the net earnings of BPI, Globe, and Manila Water. All three businesses posted record net income in 2006, with BPI’s up 8% to P9 billion, Globe’s up 14% to P11.8 billion, and Manila Water’s by 19% to P2.4 billion." Interest fees, rental, investment and other income grew by 11% to P8.5 billion largely due to gains from the sale of Ayala Land, BPI, and Globe shares. Ayala Corp. said it sold some of these shares to cover new investments in the business process outsourcing sector as well as in a private equity real estate fund which has development projects lined up overseas. The company’s stock price closed at a year-high of P590 per share, buoyed by the company’s positive fundamentals and the market’s generally robust performance. — Bernardette S. Sto. Domingo/BusinessWorld