(STAR) By Zinnia B. Dela Peña - Conglomerate Ayala Corp. said its net earnings in the first nine months of the year jumped 41 percent to P13.6 billion, already exceeding its full year 2006 profit of P12.2 billion, mainly driven by the continued strong performance of its real estate, telecommunication and banking units.

“The strong performance in the first nine months of the year is attributed to the company’s efforts to continually lower operating and financing costs, extract values from the existing portfolio at opportune times, and consistently manage our businesses in a way that maximizes the opportunities presented by an improving economic environment,” president and chief operating officer Fernando Zobel de Ayala said.

Ayala Corp. reported a 20 percent improvement in costs and expenses as a result of a 22 percent drop in its financing expenses and a 10 percent reduction in general and administrative expenses.

From P23 billion at the start of the year, the holding firm has consistently reduced its net debt, which now stands at P13 billion as of end-September 2007.

During the first half of the year, the company also gained P7 billion from the sale of its shares.

Property giant Ayala Land Inc. (ALI), one of its core businesses, reported a 15 percent growth in net income to P3.1 billion due to higher equity earnings from its corporate investment vehicles for Bonifacio Global City as well as the improved earnings performance of affiliates Cebu Holdings Inc. and Alabang Commercial Corp.

Equity in net earnings of investees, interest, fees, investment and other income increased 39 percent to P1.7 billion from only P1.2 billion.

ALI registered revenues of P18.2 billion, three percent lower than the year ago’s P16.5 billion.

Despite concerns earlier in the third quarter of an overspill of the US subprime mortgage crisis, ALI’s residential projects continued to experience steady take-up across all brands.

Sales bookings grew in terms of volume and value by 56 percent and 40 percent, respectively.

The overseas-based Filipino buyers continued to account for a substantial portion of demand, making up 36 percent of the group’s residential revenues.

Revenues from shopping center operations likewise increased 11 percent due to higher occupancy and rental rates, while revenues from its corporate business segment went up 13 percent as a result of higher lot sales and rental rates.

Ayala banking unit Bank of the Philippine Islands (BPI) reported a net income of P7.6 billion, up 11 percent from the year ago level as revenues expanded by 11 percent.

Non-interest income accounted for a bigger share, posting a 24 percent year-on-year growth.

As domestic interest rates remain at historic lows, BPI’s loan portfolio continued to expand with net loans up 10 percent and exceeding the industry’s 7.5 percent growth during the period. Middle market, SME and its mortgage loan portfolio all posted strong double-digit growth. The bank’s net 30-day non-performing loan ratio continues to improve to 4.4 percent, surpassing the industry’s 5.3 percent average.

Globe Telecom reported a four percent rise in net income to P9.7 billion on service revenues of P47 billion, an increase of 11 percent, owing to the 12 percent and six percent growth in wireless and wireline revenues, respectively.

Net additions reached more than a million subscribers, expanding total subscriber base to 19.2 million at the end of the third quarter.

Ayala Corp. said some companies under the AC Capital portfolio were affected by the continued strengthening of the peso. Integrated Microelectronics Inc., for one, reported a 27 percent drop in net profit to $21 million during the period even as its sales grew four percent to $306 million. “Prospects moving forward, however, remain positive given the continued growth in demand for consumer electronic products, the group’s diversification into higher margin segments, and its expanding manufacturing presence in low-cost centers in China,” Zobel de Ayala said .

Manila Water Co., on the other hand, continued to post strong operating performance with pre-tax earnings up 40 percent. Thus, despite the expiration of its income tax holiday this year, Manila Water registered only a slight three percent decline in its net income. The company continues to implement its capital expenditure program with investments to date exceeding P25 billion. It has consistently reduced non-revenue water, now at 25 percent, to levels at par if not better than major cities in the region, compared to 63 percent when it took over the concession a decade ago.

“We continue to actively explore opportunities for value creation within our existing portfolio as well as in new sectors that are only beginning to open up. We believe, that the growth initiatives that each of our operating units is pursuing will continue to prove to be value accretive to the group moving forward” Ayala Corp. chairman and CEO Jaime Augusto Zobel de Ayala said.

Ayala Corp.’s share price hit a record high of P645 per share last month.

It also declared this year a special cash dividend of P4 per share on top of its P4 per share regular cash dividend.

Chief News Editor: Sol Jose Vanzi

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