Ayala to Boost Profit by More Than Half as Spending Hits Record

Ayala Corp. is seeking to boost profit by more than half in two years after allotting record spending this year to increase sales at its property, banking, telecommunication and water units.

Earnings will probably rise 56 percent to at least 20 billion pesos ($444 million) by 2016 from 12.8 billion pesos last year, as power ventures of the country’s oldest conglomerate start to bear fruit, Chief Financial Officer Delfin Gonzalez said.

“We are establishing a position in sectors that are presenting attractive opportunities for investment,” Gonzalez said in an e-mailed reply to questions yesterday, adding that power and transport infrastructure have the potential to become new growth platforms for Ayala. “We are opening up to greater private-sector participation, and are sorely in need of capacity expansion.”

Ayala’s record spending this year reflects the country’s sustained economic momentum, and the company can tap various funding sources, including debt and equity, Gonzalez said. The Southeast Asian nation is poised to remain among the five fastest-growing economies globally this year, according to Bloomberg surveys, and the government will probably meet its goal of as much as 7.5 percent growth this year, Economic Planning Secretary Arsenio Balisacan said last month.

Capital Spending

Ayala shares fell 0.4 percent to 559.50 pesos at 11:44 a.m. in Manila trading, while the Philippine Stock Exchange Index dropped 0.8 percent.

Ayala is allocating 70 billion pesos or more than a third of its 187 billion-peso capital spending this year to Ayala Land Inc., one of the country’s biggest property developers, as it completes projects and buys more land, Gonzalez said. Globe Telecom Inc. will get 28 billion pesos, while Manila Water Co. will spend 7.4 billion pesos, he said.

The company posted a 22 percent increase in net income to 12.8 billion pesos last year as revenue rose at the same pace, it said on March 11.

Ayala’s balance sheet remains healthy, with 26 billion pesos in cash and debt at 71 billion pesos, Gonzalez said. Net debt to equity is 0.32 to 1 “so there is room to increase leverage,” he said.

Before it's here, it's on the Bloomberg Terminal.