Conglomerate Ayala Corp. said Wednesday net income increased 5 percent in 2018 to P31.8 billion from a year ago on strong earnings of core businesses despite the higher borrowing costs.
Ayala said in a disclosure to the stock exchange the equity earnings contribution from its business units reached P39.4 billion in 2018, up 10 percent year-on-year. This was led by the strong double-digit growth in equity earnings of Ayala Land, Globe Telecom and AC Energy.
The conglomerate said borrowing costs increased as the group funded its investments with new debt, moderating its net profits during the period.
“The aggressive growth strategy that we embarked on over a decade ago has been unprecedented for the Ayala group. Over the past 10 years, we spent close to P200 billion in capital expenditure at the parent level alone to support the investment programs of our various business units, including our new growth platforms in power, industrial technologies, infrastructure, education and healthcare,” Ayala president and chief operating officer Fernando Zobel de Ayala said.
“Our profitability has also improved steadily over the past 10 years, growing at a compounded annual rate of 15 percent,” he said.
Aside from its real estate, banking, water and telecom businesses, Ayala’s power generation unit AC Energy also delivered positive results for the company.
AC Energy’s net earnings expanded 16 percent in 2018 to P4.1 billion, driven by its domestic thermal and renewable assets as well as higher contribution from its Indonesian investments.
The strong performance and higher equity stake in GNPower Mariveles, strong wind regime and fresh contribution of its greenfield offshore project, the 75-megawatt Sidrap wind farm in Indonesia and the full-year recognition of SD Geothermal boosted AC Energy’s performance during the year.
AC Energy generated 2,800 gigawatt-hours of attributable energy in 2018, of which 48 percent was from renewable sources
AC Industrial Technologies posted 53-percent year-on-year decline in net income to P578 million, on the weaker performance of its automotive businesses and startup losses from newly acquired businesses.
The decline was partially offset by a one-time gain in its electronics manufacturing services arm.
The conglomerate earmarked P262 billion in combined capital expenditure for 2019. A bulk of this amount is allocated to Ayala Land and Globe, which allocated P130 billion and P63 billion in capital expenditure for the year, respectively.
Capital spending is programmed at P22.6 billion at the parent level to bankroll the growth initiatives of AC Energy, AC Infra and AC Health.