Ayala Corporation Reported P24 Billion in Core Earnings in H1-2024

​Ayala Corporation’s (Ayala) core net income, which excludes significant one-off items, grew 18% to P24.3 billion from stronger contributions from BPI, Ayala Land, Globe, and ACEN. Improved earnings from AC Energy & Infrastructure (ACEIC) also supported the Company’s earnings performance. Including one-off items, Ayala’s net income increased 21% to P22.3 billion.

“We are pleased with the sustained growth trajectory of our core earnings. We will continue to grow our quality businesses and explore initiatives to improve shareholder value.,” Ayala President and CEO Cezar P. Consing said.
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Banking

BPI ended the first semester of 2024 with a record net income of P30.6 billion, up 22% as solid revenue growth outpaced increases in operating expenses and provisions. Return on equity remained robust at 15.5% while return on assets improved eight basis points to 2.0 percent.

Total revenues accelerated 24% to P81.2 billion, driven by strong growth in net interest and non-interest income.

Net interest income grew 22% to P61.3 billion on the back of loan and net interest margin (NIM) expansion.

Non-interest income was up 29% to P20 billion as higher fee and forex income offset lower trading income.

Total deposits were up 14% to P2.5 trillion, supported by a 190% increase in deposits from the mass market customer segment. CASA ratio reached 64.7%, stable on a quarterly basis but down from 70.2% from the same period last year.

Asset quality remained healthy with sufficient cover despite uptick in NPLs.

Operating expenses were up 22% to P38.3 billion due to higher manpower, transaction processing, and technology costs. This was offset by faster revenue growth, leading to an improved cost-to-income ratio of 47.1%, lower by 70 basis points.

Real Estate

Ayala Land’s net income grew 15% to P13.1 billion in the first half of 2024, fueled by robust property demand and consumer activity. This propelled total revenues 28% to a record semestral high of P84.3 billion.

Property development revenues soared 34% to P51.9 billion on higher bookings across all residential segments as well as commercial and industrial lot sales at Laguindingan Technopark, Broadfield, and Nuvali estates.

Residential reservation sales increased 17% to P68.4 billion, led by strong demand in the premium and vertical segments. AyalaLand Premier’s Park Villas in Makati CBD, Alveo’s Park East Place in BGC, and Avida’s Verge Tower 1 in Mandaluyong were among the developments that drove sales performance.

Commercial leasing revenues were up 10% to P22.1 billion, driven by better contributions across all segments.

Revenues from service businesses comprised of construction, property management, and airlines, among others, soared 51% to P8.4 billion.

Capital expenditures totaled P36.5 billion, 51% of which was spent on residential projects, 27% on estate development, 11% on commercial leasing assets, and 11% on land acquisition commitments.

Telco

Globe’s core net income, which excludes non-recurring charges, foreign exchange, and mark-to-market charges, improved 18% to P11.7 billion in the first half of 2024 as higher EBITDA and equity share in affiliates offset increase in interest expense.

Consolidated EBITDA rose six percent to P43 billion because of higher gross service revenues (GSR) and effective cost management. This supported a 189-basis point appreciation in EBITDA margin, which ended at 52%, tracking above Globe’s 50% full-year guidance.

GSR grew two percent to P82.2 billion on the back of sustained growth in mobile data and corporate data.

Equity earnings from Mynt jumped 120% to P2.1 billion, anchored on GCash’s sustained upward trajectory. This represented 12% of Globe’s pre-tax net income, up 700 basis points year-on-year.
Non-telco revenues declined 58% to P1.2 billion due to the deconsolidation of ECPay from Globe’s books following the sale of its 77% stake to Mynt in September 2023.

Capital expenditures dropped 25% to P28.3 billion, aligned with Globe’s strategy to optimize capital deployment and achieve positive free cash flows by 2025.

Power

ACEN’s net income rose 49% to P6.3 billion in the first six months of 2024. This was from additions in operating capacity across its major markets including the Philippines where ACEN further improved its position as a net seller in the local electricity spot market.

Core attributable EBITDA, which includes ACEN’s share of EBITDA from non-consolidated operating projects, grew 27% to P10.6 billion.

Total renewable attributable output was up 42% to 2,908 gigawatt-hours (GWh) as production from newly operational plants outweighed the drop in output due to seasonality from renewable energy sources in the second quarter.

ACEN’s global portfolio has approximately 4.8 GW of attributable renewables capacity of which approximately 69% or 3.3 gigawatts is fully or partially operational. With over 1 GW of signed agreements and competitive tenders won, ACEN has effectively surpassed its goal of reaching 5 GW of renewable energy capacity by 2025.

Portfolio Updates

• AC Health’s revenues grew 12% to P4.4 billion on healthy contributions from both its provider and pharma groups. Net loss widened to P327 million mainly due to costs related to the ramp up of the cancer hospital.
• AC Industrials’ net loss narrowed from P5.8 billion to P5.3 billion due to lower impairments. Excluding all one-off items, AC Industrial’s core net loss widened from P446 million to P596 million because of continued weakness in its 2-wheel business, IMI, and higher OPEX in ACMobility.
• In August, Ayala through its wholly owned subsidiary AC Ventures Holding Corp., signed a definitive agreement to increase its ownership in Mynt by eight percentage points through the acquisition of common shares from existing shareholders. The transaction, which values Mynt at approximately P286.4 billion and increases Ayala’s ownership in Mynt to about 13%, forms part of Ayala’s strategy to redeploy capital to clear business winners.

Balance Sheet Highlights

• Ayala continues to maintain a strong balance sheet through active debt management and value realization initiatives.
• Consolidated cash amounted to P77.2 billion.
• Consolidated net debt increased 6% to P536.1 billion.
• Consolidated net debt-to-equity ratio increased one basis point to 0.76x, well within the Ayala’s covenant of 3.0x.
• Parent level cash was up 48% to P17.4 billion.
• Parent net debt stood at P146.4 billion.
• Loan-to-value ratio, the ratio of its parent net debt (excluding the fixed-for-life perpetuals which have no maturity) to the total value of its assets, improved 30 basis points to 10.9%.
• Parent net debt-to-equity ratio improved five points to 0.91 due to the P12.8 billion in proceeds from the final tranche of the Manila Water divestment in May.
• Parent average cost of debt was at 5.4% which is below benchmark rates.
• Ayala has a proposed offer and re-issuance of up to P15 billion Preferred “B” Shares (Offer Shares) with a base amount of P10 billion with an oversubscription option of up to P5 billion. In July, Ayala submitted a Registration Statement with respect to the Offer Shares with the Securities and Exchange Commission and has also simultaneously submitted the corresponding Application for Listing of Stocks with The Philippine Stock Exchange, Inc. The Registration Statement and Application for Listing are subject to the review of the relevant regulatory body and compliance with their corresponding requirements.