Ayala Corp. reports 2020 profit fall, Q4 recovery

AYALA CORP. on Thursday reported a net income of P5.8 billion in the fourth quarter of last year, which it said included the impact of the partial reversal of some losses incurred by Manila Water Co., Inc. and other provisions.

The listed conglomerate also said its core income in the fourth quarter hit P6.8 billion, which excluded the provisions recognized by various business units and a partial reversal of Manila Water’s “remeasurement loss.”

It did not disclose the income figures for the fourth quarter of 2019, but said its quarter-on-quarter reported income grew by 69% and core income by 46% for the October-December 2020 period.

“Our sequential growth in the fourth quarter reflects a recovery in consumer confidence that has started to show in the latter part of 2020,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.

“We expect this trajectory to continue and lead to a full economic revival by 2022 as mobility further improves and as the country executes on the vaccination rollout as planned,” Mr. Zobel added.

Ayala said it recognized a remeasurement loss in December 2019 when it reclassified its investment in Manila Water to follow the accounting standard for assets held for sale. In 2020, it had a partial reversal of the loss provision.

For 2020, Ayala said its reported net income fell by 51% to P17.1 billion, while its core income fell by 16% to P26 billion “as the impact of mobility restrictions weighed down on its various business units.”

Core profit excluded the divestment gains from its education and power businesses booked in 2019, Manila Water’s asset reclassification, and “significant” loan loss provisions for banking unit Bank of the Philippine Islands (BPI).

All of Ayala’s subsidiaries posted lower income last year because of the pandemic’s effects on business operations.

Real estate arm Ayala Land, Inc. recorded a 74% fall in net income to P8.7 billion from P33.2 billion. Revenues declined by 43% to P96.3 billion from P168.79 billion, as limited construction activities led to lower bookings.

BPI saw a 26% decrease in net income to P21.4 billion from P28.8 billion. Some P28 billion was set aside for loan loss provisions, five times larger than usual as the bank anticipated nonperforming loans.

Telecommunications subsidiary Globe Telecom, Inc. reported a 16% profit decline to P18.6 billion from P22.3 billion because of lower EBITDA (earnings before income, tax, depreciation, and amortization), higher depreciation charges, and non-operating expenses.

Excluding non-recurring charges, and foreign exchange and mark-to-market changes, core net income for Globe also went down by 13% to 19.5 billion.

Ayala’s AC Energy group, meanwhile, posted P6.2 billion in 2020, down by 75% from the P24.6 billion it posted in the previous year. The group operates in five markets, with its first project in Australia under construction. Listed subsidiary AC Energy Corp. accounted for half of the group’s net income.

Manila Water’s net income slumped by 18% to P4.5 billion after it recognized additional estimates for probable losses and lower contributions from domestic subsidiaries because of the pandemic’s impact.

Meanwhile, AC Industrial Technology Holdings, Inc. managed to shrink its net loss to P1.8 billion from P2.4 billion income in 2019, as its subsidiaries Integrated Micro-Electronics, Inc. (IMI) and MT Group performed better in 2020.

IMI incurred a net loss of $3.5 million, down from the $7.80-million net loss in 2019.

Ayala’s consolidated capital expenditure last year fell by 29% to P152 billion compared with the previous year’s P215 billion. Some P12.1 billion of last year’s spending went to the parent company to support its emerging businesses.

“This year, the Ayala group will continue to execute on its growth strategy and has allocated P196 billion in capital spending. A continued push for private sector investments would help revitalize the economy,” Mr. Zobel said.

Of the P196 billion, P11.5 billion will be allocated to support new businesses.

On Thursday, Ayala shares at the stock exchange went down by 0.77% to P773 from P779 on Wednesday. — K.C.G. Valmonte