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Ayala's net profit growth slows to 9% in first half

Lower trading gains at banking arm tempers real estate unit boom

Ayala's board has approved another $100 million for future investments, which would include a fund focusing on Southeast Asia's consumer sector. (Photo by Masayuki Kozono)

MANILA -- Ayala Corp., a major conglomerate in the Philippines, said on Friday earnings growth during the first half slowed to 9% due to lower trading gains from its banking unit.

The conglomerate, which has sizeable domestic real estate, banking, telecommunications and utility assets, reported that net income in the six-month period ending June stood at 15.1 billion pesos ($296.5 million), from 13.8 billion pesos last year, which was a 32% expansion from the same period in 2015.

Lower profit growth was mainly due to the weak earnings of Bank of the Philippine Islands, where net income dropped by 8% to 11.7 billion pesos on lack of hefty trading gains realized last year. Net interest income still grew 14% to 23.5 billion pesos on expanding clientele amid growing economy.

Net profit at Ayala Land, the nation's biggest property company, jumped 18% to 11.5 billion pesos amid steady expansion of residential, commercial, office, and leisure developments.

Globe Telecom, the number two player in the country's duopoly, said net income declined 10% to 8.1 billion pesos, after higher costs related to the acquisition of San Miguel's telecom assets last year.

Manila Water, for its part, grew net income 3% to 3.2 billion pesos on continuing expansion outside its Metro Manila concession.

AC Industrials, the manufacturing and auto dealership unit Ayala is currently building, reported a net income of 739 million pesos, down 3% on last year, after a steep drop in dividends from its Isuzu dealership. Electronics manufacturing, which has operations in China and Europe, rose 14% to $17 million, partly driven by its new acquisitions in Europe.

Ayala's power generation subsidiary surged 64% to 949 million pesos, attributable to reduced coal plant operating costs and additional contributions from Chevron's geothermal assets in Indonesia, which the company, together with partners, acquired last year.

Ayala's expects to achieve a 50 billion net income by 2020, which means the company needs to grow by a compounded annual rate of around 15%. Chief Financial Officer Jose Teodoro Limcaoco said he hopes for faster earnings expansion in the second half to match last year's full-year growth of 17%. "We are optimistic about the future and the prospects for the second half," he said.

Shares of Ayala dropped 0.23% to 882 pesos, while the Manila benchmark index fell by 0.47% on Friday.

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