Ayala turns to power, schools for growth

Posted at 04/07/14 8:05 AM

MANILA - Conglomerate Ayala Corp. (AC) sees its new businesses from power to toll operations to significantly contribute to the company’s recurring income in the next three years, as the firm ramps up investments for the new sources of growth.

John Eric Francia, AC managing director, told reporters the company expects that about 15 percent of earnings will come from power and infrastructure businesses in about two to three years.

“Right now the bulk of our earnings come from the four core listed companies, we would like a significant portion of our earnings over time to come from new businesses or unlisted businesses,” Francia said.

Francia is referring to other AC companies, including Bank of the Philippine Islands, Manila Water Co., Ayala Land Inc. and Integrated Micro-Electronics Inc.

AC, through wholly owned unit AC Energy, is putting up power-generating plants across the country totaling 800 megawatts (MW), but all of these are in partnership with other companies. Excluding the equity partnership, the company is building about 350 MW to be generated between now and 2015.

These include a stake in GN Power Ltd. Co.’s 600-MW coal-fired power plant in Mariveles, Bataan, a stake 135-MW thermal power plant of Southern Luzon Thermal Energy Corp. in Calaca, Batangas, the 33-MW Bangui Bay wind farm of Northwind Power Development Corp. in Ilocos Norte, among others.

Francia said the company hopes its power-generation capacity to reach 1,000 MW by 2019 or 2020, but it has to start negotiations to reach that goal. “We need to get construction [up] by 2016. And it typically takes three years to build a plant and the fourth year would be the full year operations.

“From a gross perspective it’s going to be a higher impact. We’re going to have partners. And similar to infrastructure we don’t mind partnering with other parties,” Francia said.

Francia said the company hopes to complete the Daang Hari-South Luzon Expressway Link by the end of the year. The company is also part or the consortium that won the automated fare collection system of the Metro Rail Transit and Light Rail Transit lines, which will be implemented by 2017.

For 2013, Ayala reported a net income growth of 22 percent to P12.77 billion from the previous year’s P10.5 billion, fueled by its real estate and banking units as the company hopes to sustain the double-digit growth rate in the years to come as revenues from its toll and power units will start to flow.

“We are encouraged by the strong performance across our business units as they reap the benefits of the aggressive growth strategies they started a few years back. In turn, we have also been able to optimize earnings and value at the parent level as we continued to rebalance our portfolio and adjusted our ownership, particularly in our banking and water units, over the past year,” Ayala President and Chief Operating Officer Fernando Zobel de Ayala said in a statement.

“As we ramp up our power business and as the economic environment remains sound, we are optimistic we can sustain double-digit earnings growth through 2014,” he said.

This year, Ayala earmarked about P190 billion for capital expenditures to continue its investment programs in real estate, banking, telecommunications and water units, as well as to ramp up new businesses.