AC net income doubles to P37.8B

The latter move is aimed at rebalancing AC Energy’s generation portfolio to make room for renewable energy assets

Growth from units Bank of the Philippine Islands (BPI), Globe Telecom and Ayala Land Inc. (ALI) paired with gains from its emerging businesses propped up Ayala Corp.’s (AC) net income to P37.8 billion in the first half of the year, more than twice the P16.1 billion it recorded in the same period in 2018.

The listed conglomerate’s equity earnings, including divestment gains from the merger of AC Education and iPeople and the partial divestment of AC Energy’s thermal assets, also grew at a double-digit rate to P41.7 billion in the first six months from P19.5 billion last year.

“Our first-half results reflect the strength of our core holdings in real estate, banking, and telecommunications. This was complemented by the value realization initiatives in our energy business,” Ayala president and chief operating officer Fernando Zobel de Ayala was quoted as saying.

“We are pleased with the rapid growth of AC Energy, its growing contribution to our overall profitability, and the regular value realization exercises to deliver investment returns to Ayala,” he added.

Power subsidiary AC Energy’s net profits skyrocketed to P23.2 billion in the first semester from P2.1 billion in 2018 owing to recovery costs incurred from adjustments in power plant construction and operations as well as its partial divestment of thermal assets. The latter move is aimed at rebalancing AC Energy’s generation portfolio to make room for renewable energy assets.

ALI registered 12 percent higher net income in the period, to P15.2 billion from P13.5 billion, owing to growth from its commercial leasing and the sale of offices and commercial and industrial lots.

BPI’s net profits surged 25 percent to P13.7 billion in the same period, to P13.7 billion from P11.03 billion on the back of sustained margin expansion aided by growing fee-income business and improved operational efficiencies.

Additionally, Globe Telecom saw profits rise 21 percent to P12 billion in the first half as it rolls out modernized 4G/LTE network.

Meanwhile, AC’s water unit Manila Water booked 18 percent lower earnings in the period, to P2.9 billion from P3.6 billion last year due to higher operating expenses and lower billed volume brought by the water shortage in the summer period.

Lastly, AC Industrials recorded a net loss of P510 million in the period from a gain of P751 million last year on “macropolitical risks, sectoral headwinds and component supply tightness,” AC said.

AC Industrials’ electronics manufacturing arm Integrated Micro-Electronics was affected by the global slowdown in the car industry, paired with persistent component shortages and geopolitical risks in China and the United Kingdom, AC added.

AC’s parent level cash stood at P18.1 billion with net debt at P71.1 billion in the semester, from P15.7 billion and a net debt of P93.5 billion last year.

AC said that improved ratios due to reduced debt following the conversion of its $300-million exchangeable bond as well as higher investment values boosted its balance sheet, as well as allowed investments and covered dividend and debt obligations.

Net debt-to-equity and consolidated net debt-to-equity ratios stood at 0.53 from 0.81 at the end of 2018 and 0.66 from 0.74, respectively.

Our first-half results reflect the strength of our core holdings in real estate, banking, and telecommunications.