Conglomerate Ayala Corp. said it remains on track to register a net income of P50 billion as early as this year despite subdued earnings in 2018.
Ayala Corp. chief finance officer Jose Teodoro Limcaoco said in a recent interview the group’s net income would be boosted by the partial sale of the group’s coal power assets in the Philippines to Aboitiz Power Corp.
Limcaoco said the acquisition of a majority stake in Phinma Energy Corp. by unit AC Energy Inc. would also push the conglomerate’s net profit starting this year.
“We are on track to hit P50 billion net income and that will be helped by AC Energy’s acquisition of Phinma Energy and disposition of assets,” Limcaoco said.
“If we do the final numbers, we can hit P50 billion this year but that will depend on the Aboitiz deal,” he added.
The conglomerate is set to book a significant gain from the sale of a 49-percent voting stake and 60-percent economic interest in AA Thermal Inc. to Aboitiz Power Corp. by early next year.
The deal worth $579.2 million (P31.4 billion) is expected to be finalized shortly after the transaction is approved by the Philippine Competition Commission.
The AA Thermal platform acquired by Aboitiz Power consists of AC Energy’s limited partnership interests in GNPower Mariveles Coal Plant Ltd. Co., owner and operator of a 632-megawatt coal plant in Mariveles, Bataan; and GNPower Dinginin Ltd. Co., the developer and operator of a 1,336-MW coal-fired plant project in Dinginin, Bataan currently under construction.
The conglomerate expects net income to more than double to P50 billion by 2020 from P22.3 billion in 2015
The “Ayala 2020” plan aims to improve return on equity to 15 percent from the current 12.1 percent, expand the equity-earnings contribution of businesses outside its four largest business units to 20 percent, and increase the group’s presence in Southeast Asia to 10 percent of equity earnings by 2020.
Aside from its core businesses in telecommunications, real estate and banking, the conglomerate’s investments in new businesses, including power and transport infrastructure, health care and education, and automotive and manufacturing, are also expected to boost profitability.
Ayala Corp. saw its net income in 2018 rise by just five percent in 2018 to ₱31.8 billion from the previous year, as higher borrowing costs tempered the strong earnings contribution from core businesses.