By Krista A. M. Montealegre,
THE AYALA GROUP is ramping up its capital expenditure budget by nearly half this year to support the expansion of its business units after sustaining double-digit profit growth for the sixth consecutive year.
In a statement, Ayala Corp. announced it will allocate P249 billion for capex this year, an improvement of 44% from a year ago, to finance its own investment program as well as the expansion of Ayala Land, Inc., Globe Telecom, Inc. and Manila Water Co., Inc.
At the parent level, the conglomerate is pouring in P51.8 billion primarily to fund its subscription to Bank of the Philippine Islands’ stock rights offering and investments in the energy, industrials, education and health businesses.
The higher spending came after Ayala registered a 16% growth in net income to P30.3 billion last year from P26 billion. Equity earnings contributions from the conglomerate’s business units improved 12% to P35.8 billion, while the income share of Ayala Land and AC Energy Holdings, Inc. rose 21% and 30%, respectively.
“We are happy to see this earnings momentum sustained for the sixth consecutive year as the expansion strategy across our portfolio of businesses continues to bear fruit,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala was quoted in a statement as saying.
“Consistent double-digit growth since 2012 has translated to a compounded annual growth rate of 22%. We remain positive about our trajectory as we move closer to our 2020 goals,” Mr. Zobel said, referring to a plan to hit a net income of P40 billion by 2020.
AC Energy’s net profit jumped 31% to P3.5 billion mainly driven by fresh equity earnings contribution of geothermal assets acquired in Indonesia coupled with the solid contribution of its wind energy assets.
Ayala Land earlier reported that the higher property sales and the solid performance of the leasing business pushed earnings by 21% to P25.3 billion.
AC Industrial Technology Holdings, Inc., the holding firm for its manufacturing and automotive assets, registered a 4% uptick in net income to P1.2 billion, riding on the 21% expansion in Integrated Micro-electronics, Inc.’s earnings to $34 million.
Ayala Healthcare Holdings, Inc. continues to build its network of retail pharmacy and primary care. Generika, the chain of affordable quality generic medicines, booked P3.3 billion in revenues, up 15% from a year ago on higher retail sales and store expansion.
BPI posted a 1.7% rise in net income to P22.4 billion in the absence of a one-time gain from the sale of securities in 2016. Excluding those extraordinary items, net profit grew at a faster pace of 31%.
Higher operating expenses and depreciation charges as a result of increased investments dragged Globe Telecom’s net profit by 5% to P15.1 billion.
Manila Water posted a muted net income growth of 1% to P6.2 billion as increased operating expenses and business development costs tempered top-line growth during the year.
The Ayala group did not disclose the financial performance of its infrastructure and education businesses.
Shares in Ayala added P12 or 1.18% to close at P1,032 apiece.