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Date : 08/12/2011
Ayala reported a net income of P4.9 billion in the first half of the year, up 12% compared to the same period last year. The strong performance of its property, banking, water businesses as well as the sustained momentum of its telecom unit pushed equity earnings 9% higher to P6.2 billion.
Ayala president and chief operating officer Fernando Zobel de Ayala said, “The company’s results in the first half of this year reflect the positive economic environment and the robust domestic demand that has been sustained since last year. The aggressive moves of our business units to develop innovative products and services responsive to the needs of a much broader market have resulted in healthy revenue and earnings growth. We believe this momentum will continue through the rest of the year.”
Ayala Land hit a record high in quarterly earnings in the second quarter, pushing first half net income 35% higher to P3.4 billion as revenues increased and margins expanded across its businesses. Revenues grew by 15% driven by strong residential sales and commercial leasing business. Property development revenues grew by 27% with steady completion and bookings of its projects. Residential project launches were well received resulting in record take-up in the second quarter. Revenues from the commercial leasing business of both retail and offices were up 17% as a result of improved occupancy and higher gross leasable areas. Revenues from other businesses such as Hotels and Resorts also improved reflecting a 25% growth year-on-year.
Bank of the Philippine Islands saw double-digit growth in business volumes, revenues and net income. Net interest income increased by 12% and fee-based income rose by 7% year-on-year. Despite an 11% increase in operating expenses due to one-time CBA-related payments, the bank’s net income grew by 11% to P6.2 billion. Loans to customers increased by 16% driven the 24% growth in middle market loans, 20% increase in SMEs, 15% rise in top tier corporate loans and a 13% increase in consumer loans. Despite an expansion in loan book, asset quality continued to improve with non-performing loan ratio down to 1.8%.
Globe Telecom sustained the momentum of its mobile and broadband businesses with consolidated revenues reaching a new high of P16.6 billion in the second quarter. This put total service revenues in the first half of the year to P33 billion, 7% higher than last year’s. This was achieved despite a market that remains fiercely competitive and amidst price and cost pressures. Revenue growth was broad-based with mobile revenues up 5% as bulk and unlimited voice and SMS services continued to grow, along with mobile browsing revenues. Its broadband revenues jumped by 42% as a result of robust subscriber growth and stabilizing ARPUs. Globe’s mobile subscribers reached 28.4 million by the end of June, 15% higher year-on-year. Its broadband subscriber base also reached a new high of 1.3 million. As robust revenue growth outpaced the rise in operating expenses and other costs, consolidated EBITDA margin held steady at 55%. Net income in the first six months of the year rose by 9% to P5.5 billion with core net income at P5.6 billion.
Manila Water achieved steady growth in revenues and earnings. Revenues grew by 6% in the first half of the year to P5.8 billion driven by a combination of tariff adjustment and modest billed volume growth from the East concession zone and from operations in Laguna and Boracay. Net income increased by 2% to P2 billion. Manila Water’s customer base continued to expand with 36,000 new service connections coming from the current area as well as expansion areas in the East Zone. Non-revenue water continued to improve across all the three service areas ending at 11.5% in the East zone from 13.5%, 38% in Laguna from 44%, and 24% in Boracay from 35%.
Ayala’s auto dealerships registered a 22% decline in revenues in the first half of the year due mainly to lower vehicle sales as a result of supply disruptions expected to last until the fourth quarter of the year. This resulted in a 71% decline in net income to P50 million in the first semester. Despite lower sales, however, Ayala dealerships maintained network leadership accounting for 46% of Honda and 32% of Isuzu sales nationwide.
Integrated Microelectronics, Inc. recorded healthy revenue growth with sales up 39% year-on-year, which includes the sales of recently acquired PSi Technologies. China operations grew by 23% while IMI Philippines’ operations also posted growth of 6% driven by volumes from key customers. Higher direct labor costs, however, resulted in a decline in gross profit and margins in the first half of the year, which put net income excluding one-offs 52% lower during the period.
BUSINESS PROCESS OUTSOURCING (BPO)
The investee companies of LiveIt, our holding company for BPO investments, also achieved healthy revenue growth. Combined revenues were US$489 million in the first half of the year, of which LiveIt’s share was US$152 million, 16% higher than last year, due to the growth of client volumes across all investees. Greater scale and cost efficiencies resulted in LiveIt’s share of EBITDA increasing by 55% to US$11 million, Operating Net Income improving to a profit of nearly $1 million, and Reported Net Loss declining to $12 million. The Reported Net Loss was driven largely by non-cash charges such as amortization of intangibles for Stream and Integreon’s acquisitions, and interest expense related to the leverage buyout of Stream.
Ayala parent company ended the period with nearly P30 billion in cash and a net debt to equity ratio of 0.17 to 1. It successfully raised P10 billion from the issuance of its multiple put bond last May and subsequently redeemed its P5.8B preferred B shares last July.
Ayala recently made inroads in the power sector as it gears up to build a portfolio of power generating assets in both renewable and conventional sources. It recently closed a joint venture agreement with Trans-Asia Oil and Energy Development Corp., a subsidiary of the Phinma Group for the construction and operation of a 135-MW thermal plant in Calaca, Batangas.
The above statement pertains to the disclosure made today, August 12, 2011, to the Securities and Exchange Commission, Philippine Stock Exchange, and Philippine Dealing and Exchange Corporation, by Ayala chief finance officer Delfin Gonzalez, Jr.