MANILA, Philippines – The Philippines’ oldest conglomerate Ayala Corporation saw its net income decline by 8% in the first quarter due to the absence of the P1.8-billion ($40.17 million) one-time gain from the sale of its business process outsourcing (BPO) unit.
In a disclosure to the Philippine Stock Exchange (PSE), Ayala registered P5 billion ($111.61 million) in net profits, as most of its core businesses reported double-digit earnings growth across the board.
The conglomerate said that without the effect of divestment gains last year from its BPO asset, Stream Global Services, Incorporated, its first quarter net income rose by 39%.
Ayala earlier said it targets to register a net profit of P20 billion ($446.26 million) by 2016.
“We continue to be encouraged by the strong performance of the businesses across the group. We remain optimistic that we can sustain the strong first quarter results throughout the rest of the year, and stay on track to meet our strategic goals and financial targets,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said in the disclosure.
Banks on core businesses
The healthy performance of real estate, banking, telecommunications, and electronics manufacturing businesses offset the flat contributions from Manila Water Company, Incorporated.
Registering also a double-digit growth, Ayala's Bank of the Philippine Islands' net income climbed by 36% to P4.9 billion ($109.36 million), partly from higher securities trading gains.
In telecommunications, Globe Telecom, Incorporated's bottom line grew by 43% to P4.2 billion ($93.74 million), driven by growth in data revenues across all major service lines.
In electronics manufacturing services, Integrated Microelectronics Incorporated’s earnings increased 27% to P288 million ($6.43 million) vis-à-vis its first quarter last year despite foreign exchange challenges, on the back of better margins and realized cost savings and productivity.
Its water unit Manila Water, however, reported flat net income at P1.4 billion ($31.27 million), with stronger billed volume levels offsetting higher operating expenses.
Ayala said the performance of its business units during the first 3 months of the year registered P6.4 billion ($142.80 million) in equity earning, 27% higher year-on-year.
“Compared to net income inclusive of the net divestment gain in the same period last year, equity earnings declined 7% in the first quarter of the year,” it said in the disclosure.
The Ayala group in February announced that it is spending around P185 billion ($4.13 billion), mainly to fund the expansion programs of its real estate and telecommunication units.
At the parent level, Ayala set a 2015 capital spending budget of P21 billion ($468.60 million) to bankroll its pipeline of power generation and transport infrastructure projects, among others.
Ayala, along with its partners, bagged two public-private partnership (PPP) contracts in 2014: a single ticketing system for Metro Manila’s elevated railways and the Light Rail Transit line 1 (LRT1) Cavite extension project.
Its first PPP project is the Daang Hari Connector Road, now called the Muntinlupa-Cavite Expressway. – Rappler.com