MANILA - Property giant Ayala Land Inc. reported Friday its profits dropped 34% in the first half of the year due to the absence of extraordinary gains.

In a disclosure to the Philippine Stock Exchange, Ayala Land said its net income fell to P2.07 billion in January to June this year from P3.13 billion in the same months in 2008, when the company booked non-recurring gains of P762 million from the sale of shares in 3 subsidiaries.

The company's core earnings for the first 6 months were lower by 16% at P1.87 billion compared to last year's P2.22 billion while revenues fell slightly to P14.4 billion from P15.4 billion.

For the second quarter alone, Ayala Land's net income declined 15% to P1.02 billion from P1.2 billion, but core earnings rose by 6% to P964 million from P907 million on the back of a 16% drop in operating expenses.

Net operating income margins were sustained at 31% at end-June versus the same period last year.

"Strong cost control efforts in the residential and construction businesses drove margin gains and offset the slight decline in shopping center and corporate business margins which all incurred additional start-up related costs in their operation of new projects," it said.

Revenues from residential development were down 2% at P6.85 billion in the first half of 2009 against P7.02 billion in 2008 as gains by middle-income brand Alveo and affordable brand Avida were offset by the decline in revenues of high-end developer Ayala Land Premier.

Total revenues generated by shopping centers rose by 5% to P2.21 billion during the period, driven by strong performance of Market!Market! as well as the net expansion in gross leasable area from new malls Greenbelt 5 and Glorietta 5.

Corporate business revenues, meanwhile, jumped 84% to P788 million as the contribution of new office buildings that became operational in the second half of last year and early this year kicked in.

Despite the decline in earnings, Ayala Land chief finance officer and senior vice president Jaime Ysmael still sees a "clear growth path ahead" for the company.
 
"Indications are positive as buyer confidence is returning and the market has proved resilient," he said, noting that growth in core earnings in the second quarter was largely driven by the recovery in the residential segment.